Mortgage Rates Fall to Fourth Consecutive Record Low

Federal Reserve efforts helped long-term mortgage interest rates drop to their lowest point on record, for the fourth straight week, according to mortgage giant Freddie Mace Thursday.

“Interest rates for 30-year fixed-rate mortgages fell for the tenth week to a fourth consecutive record low due in part to the Federal Reserve’s recent purchases of mortgage-backed securities issued by Freddie Mac, Fannie Mae and Ginnie Mae,” said Frank Nothaft, Freddie Mac vice president and chief economist. “On November 25, 2008, the Federal Reserve announced that it planned to purchase up to $500 billion of these securities by the end of June of this year. For the sake of comparison, there were roughly $4.7 trillion of such securities backed by home mortgages available as of September 30, 2008.”

“Since the end of October 2008,” Nothaft added, “these rates have declined by almost 1 1/2 percentage points, or payment savings of about $184 a month for a $200,000 loan – an additional $11 dollars from last week.”

The average rate on a 30-year fixed rate home loan fell to 5.01 percent, excluding fees, during the week ending January 8, 2009, down from 5.10 percent the previous week. The 30-year loan rate has never been lower during the entire 38-year history of the Freddie Mac weekly survey. Last year at this time, the average rate was 5.87 percent.

Rates on 15-year fixed rate mortgages averaged 4.62 percent, a decrease from 4.83 percent the week before. One year earlier, the average 15-year FRM rate was more than three-fourths of a point higher at 5.43 percent.

One-year adjustable rate mortgages carried an average rate of 4.95 percent, an increase from 4.85 one week previous. A year ago, the one-year ARM average rate was 5.37 percent.

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