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Freddie Mac: Mortgage rates hold at year's low; 30-year average at 4.1%

Average rate for 30-year fixed mortgage is 4.1% for third straight week, Freddie Mac says
Lowest mortgage rates of the year have failed to generate robust home sales
Most applications for mortgages are from homeowners hoping to refinance at the lowest rates of the year

No news remains good news on the mortgage front, where Freddie Mac said the average rate for a 30-year fixed home loan has settled in at 4.1%, its low point for the year.

Lenders were offering 15-year fixed loans at an average of 3.24% this week, down from 3.25% a week ago. The start rate on a hybrid adjustable loan with the rate fixed for the first five years was unchanged at 2.97%, Freddie Mac reported Thursday.

It was third straight week of 4.1% readings on the 30-year loan from Freddie Mac, the government-backed home finance giant. Freddie asks lenders about the terms they are offering to solid borrowers who pay less than 1% of the loan amount in upfront fees.

The average rate for a standard 30-year fixed loan with a 20% down payment has not been above 4.15% since mid-June. Mortgage professionals said solid borrowers who are willing to pay 1% of the loan amount in upfront discount points can lock in 30-year fixed rates for less than 4%.

The low rates and higher home prices have made it easier for some homeowners who missed the sub-4% rates in 2012 and early 2013 to refinance their home loans now.

Of the new applications for mortgages last week, 57% were for refinance loans -- the highest level since March, according to the Mortgage Bankers Assn.

Despite the remarkably cheap home financing, recent home sales have been lackluster, “and there doesn’t seem to be much forward momentum,” said Keith Gumbinger, vice president of rate tracker HSH.com.

Still, it’s difficult for many people to qualify for loans, he said.

The National Assn. of Realtors said sales of previously owned homes managed a 2.4% increase in July. However, Gumbinger pointed out, those sales reflect demand from as long as 60 days ago because they are recorded at the time the loan closes and the deed changes hands.

Despite improving optimism among homebuilders, sales of new homes have been stuck in low gear, sliding 2.4% in July, according to the Census Bureau.

These are recorded when the contract to buy has been signed, Gumbinger noted, and so may be more reflective of the current demand for homes.

"Despite measurable improvements in market conditions over the past couple of years, crisis-era underwriting standards remain in place,” he said.

@ScottReckard covers banking, home loans and related topics

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