Freddie Mac: 30-year mortgage falls to 3.89%, lowest since May 2013

Freddie Mac's latest report shows 30-year mortgage rate at lowest point since May 2013

The average rate for a 30-year fixed mortgage fell this week to 3.89%, an 18-month low, from 3.97% last week, according to Freddie Mac's survey of lenders.

The average for a 15-year fixed-rate home loan fell to 3.1% from 3.17%. Start rates for adjustable mortgages also eased, Freddie Mac said Thursday in its widely watched weekly report.

Freddie Mac chief economist Frank Nothaft said "underwhelming" economic news was a factor in depressing rates. Home sales and job growth have been weaker than expected, he said.

Competition to make loans in the slow-sales environment appears to be forcing lenders to cut their profit margins.

Mortgage bankers reported an average profit of $897 per loan they originated in the third quarter of 2014, down from $954 in the second quarter, the Mortgage Bankers Assn. said Thursday in its quarterly report on industry performance.

Strong sales of expensive homes were reflected in an increase in jumbo mortgage lending -- loans too large to be backed by Fannie Mae and Freddie Mac. The limit in Los Angeles and Orange counties is $625,500.  

The jumbo share of first mortgage originations rose to 9.4% in the third quarter, the highest level since the mortgage trade group began issuing quarterly performance reports in 2008.

Freddie Mac asks lenders every Monday through Wednesday about the terms they are offering to low-risk borrowers who pay half of 1% of the loan amount in lender fees and discount points.

Payments for such services as appraisals and title insurance are not included.

The survey provides a consistent gauge of mortgage trends, but actual rates adjust constantly and are influenced by many factors.

In addition to borrowers' credit histories and debt loads, the factors include whether the borrowers opt for zero-cost loans at higher rates or pay extra to lenders upfront to lower the rates.

Follow @ScottReckard for news of banks and home loans

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