U.S. Mortgage rates nudge closer to a record low

U.S. Mortgage rates nudge closer to a record low

U.S. mortgage rates fell in the latest week supporting government efforts to bring them down to levels that will spur demand and help the hard-hit housing market begin to recover.

Interest rates on U.S. 30-year fixed-rate mortgages fell to 5.03 percent for the week ending March 12 from the previous week's 5.15 percent, according to a survey released on Thursday by home funding company Freddie Mac.

Eight weeks earlier, mortgage rates were 4.96 percent, the lowest since Freddie Mac started the Primary Mortgage Market Survey in 1971.

"Mortgage rates had room to ease this week following news of a weaker jobs market, which may slow consumer spending and keep inflation at bay," Freddie Mac Vice President and Chief Economist Frank Nothaft said in a statement.

The battered U.S. housing market, which is in the midst of its worst downturn since the Great Depression, is both the source and a major casualty of the credit crisis. A recovery for the market could portend a turnaround for the United States, the world's largest economy.

The recent fall in mortgage rates can be tied to yields on U.S. Treasury bonds, to which mortgage rates have a link.

Thirty-year mortgage rates had mostly been on a downward trend since the Federal Reserve unveiled a plan in late November to buy as much as $500 billion of mortgage securities backed by Fannie Mae, Freddie Mac and Ginnie Mae.

The program also entails buying up to $100 billion of debt issued by Fannie Mae, Freddie Mac and the Federal Home Loan Banks.

Low mortgage rates in recent weeks have spurred a surge in demand for home refinancing loans, and refinancing to lower monthly payments should provide a bit of relief to strapped consumers amid rising unemployment and a shrinking economy.

Low mortgage rates, however, have had only a marginal impact on demand for loans to purchase homes, igniting calls to bring rates down to much lower levels.

OTHER RATES FALL

The 15-year, fixed-rate mortgage averaged 4.64 percent in the latest week, down from 4.72 the prior week. One-year adjustable-rate mortgages, or ARMs, fell to an average of 4.80 percent from 4.86 percent last week.

Freddie Mac said the "5/1" ARM, set at a fixed rate for five years and adjustable each following year, averaged 4.99 percent, compared with 5.08 percent a week earlier.

A year ago, 30-year mortgage rates averaged 6.13 percent, 15-year mortgages were at 5.60 percent and the one-year ARM was at 5.14 percent. A year ago, the 5/1 ARM averaged 5.58 percent.

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 0.6 percent, unchanged from the previous week. The one-year ARM fees and points were 0.5 percent, unchanged 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 portfolio.

By Julie Haviv

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