(Adds details from survey, background)
By Julie Haviv
NEW YORK, March 26 U.S. mortgage rates fell to
record lows again this week, feeding demand for refinancings,
as a result of government efforts to reduce rates to levels
that will help the hard-hit housing market begin to recover.
Interest rates on 30-year fixed-rate mortgages averaged
4.85 percent for the week ending March 26, down from the
previous week's 4.98 percent. The rate broke the previous
record low of 4.96 percent set 10 weeks earlier, according to
The 30-year fixed-rate mortgage is the lowest since Freddie
Mac started the Primary Mortgage Market Survey in 1971.
"The Federal Reserve's announcement that it intends to
purchase Treasury securities over the next six months caused
bond yields to drop and mortgage rates followed," Frank
Nothaft, Freddie Mac vice president and chief economist, said
in a statement.
Low mortgage rates have spurred a surge in home refinancing
loans, and resulting lower monthly payments should provide a
bit of relief to strapped consumers amid rising unemployment
and a shrinking economy.
But the precipitous drop in mortgage rates has made only a
marginal impact on demand for loans to purchase a home,
offering little sign of a recovery from the worst housing
downturn since the Great Depression.
"Everything helps when it comes to the U.S. housing market
and lower interest rates on mortgages should make it easier for
buyers to enter the market and absorb supply, which is still
quite high," said Lawrence J. White, professor of economics at
New York University's Stern School of Business.
"For existing homeowners who are able to refinance, it
should help prevent foreclosures and free up cash," he said.
OTHER RATES DROP
Freddie Mac said the 15-year fixed-rate mortgage averaged
4.58 percent in the latest week, down from 4.61 the prior week.
The 15-year fixed-rate mortgage also reached a record low.
One-year adjustable-rate mortgages, or ARMs, fell to an
average of 4.85 percent from 4.91 percent last week.
Freddie Mac said the "5/1" ARM, set at a fixed rate for
five years and adjustable each following year, averaged 4.96
percent, compared with 4.98 percent a week earlier. The 5/1 ARM
has never been lower since the span of Freddie Mac's weekly
survey, which dates back to 2005 for the 5/1 ARM.
A year ago, 30-year mortgage rates averaged 5.85 percent,
15-year mortgages were at 5.34 percent and the one-year ARM was
at 5.24 percent. A year ago, the 5/1 ARM averaged 5.67
Lenders charged an average of 0.7 percent in fees and
points on 30-year mortgages, unchanged from the previous week,
while they charged an average 0.7 percent in fees and points on
15-year mortgages, unchanged from the previous week.
The 5/1 ARM fees and points were 0.7 percent, unchanged
from the previous week. The one-year ARM fees and points were
0.6 percent, down from 0.7 percent the previous week.
Freddie Mac and its larger sibling, Fannie Mae, were placed
under government conservatorship in early September.
Freddie Mac is a mortgage finance company chartered by
Congress that buys mortgages from lenders and packages them
into securities to sell to investors or to hold in its own
(Editing by Chizu Nomiyama)