Thirty-Year Mortgage Hits 5.47%, a Four-Year Low

CNBC does a nice job of explaining why mortgage rates are currently so low. Too bad so many of our clients in New York have jumbos, which are still higher than normal.

Thirty-Year Mortgage Hits 5.47%, a Four-Year Low

Interest rates on the most common U.S. mortgages fell to their lowest level in over four years, a report on Thursday showed, as billions of federal dollars invested in the housing sector have begun to lower the costs of owning a home.

Thirty-year mortgage rates fell to an average of 5.47 percent in the latest week, the lowest since hitting 5.40 percent in March 2004, according to Freddie Mac.

Home borrowing rates have fallen sharply since the Federal Reserve promised in late November to buy up to $500 billion of mortgage investments from Freddie Mac
and Ginnie Mae. The three government-backed enterprises back most new home loans since Wall Street has turned its back on the sector.

The Fed has also promised to buy $100 billion in fresh debt issued by Fannie, Freddie and the twelve Federal Home Loan Banks in a further effort to grease the financial markets and coax potential homebuyers into the market.

"After Federal Reserve actions to increase liquidity in the mortgage market, interest rates for fixed-rate mortgages took a dive," Frank Nothaft, Freddie Mac vice president and chief economist, said in a recent statement.

U.S. 15-year mortgage rates also fell in the week to an average of 5.20 percent from 5.33 percent last week, the survey said. This was the lowest since they averaged 5.15 percent in early February.

Recovery of the housing market is seen as a key condition to restoring the broader economy to health and recent data suggests that lower mortgage rates have spurred potential home buyers.
Mortgage applications surged by the largest amount on record earlier this month in the wake of government action, the Mortgage Banks Association said.


On Wednesday, that volume was seen to slip a bit but many more homeowners are taking advantage of the rates as are current borrowers who want to refinance and lower their monthly payments.