George S. May Business Blog

30 year fixed mortgage rates continue to fall

30 year fixed mortgage rates plunged, this week, to the lowest level since January. Mortgage finance giant Freddie Mac said today that average rates on 30-year fixed-rate mortgages dropped to 4.98 percent this week, down from 5.03 percent last week, as part of the Federal Reserve’s effort to boost the housing market.

It was the lowest since the week of Jan. 15, when it was at 4.96 percent, the lowest point in the history of Freddie Mac’s survey, which goes back to 1971.

The rate quotes included in Freddie Mac’s survey were taken before the Fed said Wednesday it will pump $1.2 trillion into the economy in an effort to lower rates on mortgages and other and loosen credit. Experts say this likely won’t be a bottom; mortgage rates are expected to fall down even further, perhaps past record lows.

It is reported that many mortgage brokers were actually disappointed today, as they had hoped the number would have fallen even further.

 ”The problem is: We’re still not seeing the injection of capital from the private sector,” said Douglas Braden, a broker with Northern Colorado Mortgage Co.

Plus many lenders, after laying off workers in droves, don’t have the capacity to keep up with a refinancing boom.

”They’re already swimming in applications,” said Greg McBride, senior financial analyst with Bankrate.com. ”You could keep reducing mortgage rates, but if the lender’s already got a stack of files on his desk, he’s not going to answer the phone.”

Interest rates have drifted lower since November when the Federal Reserve pledged to buy up mortgage-backed securities in an effort to bolster the long-suffering housing market.

The Fed expanded that effort Wednesday, announcing plans to buy up to $300 billion of long-term government bonds and $750 billion in additional mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac.

The average rate on a 15-year fixed-rate mortgage dropped to 4.61 percent, down from 4.64 percent last week, Freddie Mac said.

Rates on five-year, adjustable-rate mortgages fell to 4.98 percent, compared with 4.99 percent last week. Rates on one-year, adjustable-rate mortgages rose to 4.91 percent, from 4.8 percent last week.

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