Mortgage rates at record low for 2nd week

Rates on 30-year mortgages fell to the lowest level on record for the second consecutive week after the Federal Reserve launched a new effort to assist the staggering U.S. housing market.

Mortgage finance giant Freddie Mac said Thursday that average rates on 30-year fixed-rate mortgages dropped to 4.78% this week, from 4.85% last week.

It was the lowest in the history of Freddie Mac’s survey, which dates back to 1971. Rates are down by more than a full percentage point from a year ago. Low rates have sparked a surge in refinancing activity. The Mortgage Bankers Assn. said Wednesday that its weekly application index climbed 3% for the week that ended March 27, on top of a 30% increase a week earlier. Nearly 80% of applications came from borrowers seeking to refinance.

Mortgage rates fell dramatically over the winter and have fallen further after the Federal Reserve said last month that it would buy $1.2 trillion in mortgage-backed securities and $300 billion in long-term government debt.

The average rate on a 15-year fixed-rate mortgage fell to 4.52% this week, from 4.58% last week, according to Freddie Mac. Rates on five-year adjustable-rate mortgages dropped to 4.92%, compared with 4.96% last week. Rates on one-year adjustable-rate mortgages fell to 4.75% from 4.85%.

The rates do not include add-on fees known as points. The nationwide fee averaged 0.7 of a point last week for all mortgages in Freddie Mac’s survey except for one-year adjustable mortgages, which had an average fee of 0.6 of a point.