Mortgage rates near low for the year

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Home loan rates are near their lowest point of the year in the wake of government efforts to help the housing markets. That has spurred a surge in applications to refinance mortgages, but the worst-off borrowers and people with jumbo mortgages aren’t being helped.

Mortgage giant Freddie Mac said today that the average rate on 30-year mortgages dropped to 5.53%, down from 5.97% last week and the lowest since the week of Jan. 24, when it was 5.48%.

The decline reflected the Federal Reserve’s commitment last week to buy $600 billion of mortgage securities and other debt issued by Freddie Mac and Fannie Mae. The government also is said to be considering a proposal by the financial industry for the Treasury Department to buy mortgage securities in a bid to force rates to as low as 4.5%.

New applications for mortgages last week shot up 51% from the previous week -- largely because of refinancings -- but were down 22% from a year earlier, the Mortgage Bankers Assn. reported Wednesday.

But analysts said trimming rates on mortgages financed by Fannie and Freddie won’t help the many Californians with jumbo loans because the government-backed companies don’t buy them. Lower interest rates also won’t do anything for struggling homeowners who have little or no home equity.

“This does not directly help jumbo mortgage borrowers, and it especially won’t help the majority of delinquent, upside-down or poor-credit homeowners who are going into foreclosure,” said Greg McBride of rate tracker Bankrate.com.

-- E. Scott Reckard