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U.S. Mortgage Rates Near A 4-Decade Low

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Bloomberg News

Published: January 1, 2009

U.S. mortgage rates dropped to the lowest level in nearly four decades this week as the government stepped up efforts to revive the housing market.

The average rate on a 30-year fixed mortgage tumbled for a ninth straight week to 5.10 percent from 5.14 percent a week earlier, Freddie Mac said in a report Wednesday. That's the lowest in data that goes back to 1971, the McLean, Va.-based mortgage buyer said.

The 15-year fixed rate fell to 4.83 percent from 4.91 percent, and the one-year adjustable rate dropped to 4.85 percent from 4.95 percent. Shares of U.S. homebuilders pared their losses after the Freddie Mac survey was released.

On Dec. 16, the Federal Reserve cut its benchmark interest-rate target to as low as zero and said it will buy debt as the next step in combating the longest recession in a quarter-century and reviving credit.

The Mortgage Bankers Associations index of applications to purchase a home or refinance a loan rose to 1,245.7 this week, the highest level since 2003, from the prior week's 1,245.4. The groups purchase gauge climbed 1.4 percent, and the refinancing measure fell 0.4 percent.

On Tuesday, the Fed said it will use BlackRock Inc., Goldman Sachs Asset Management, Pacific Investment Management Co. and Wellington Management Co. to manage the purchase of $500 billion of mortgage-backed securities it announced Nov. 25.

Sales of single-family homes in November dropped 7.6 percent from the prior month, the most in two decades, according to the Chicago-based National Association of Realtors.

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