30-year fixed-rate home loans drop to lowest level of the year

Interest rates on mortgages have declined for a fifth straight week, with 30-year fixed-rate loans dropping below 5% to the lowest level of the year, Freddie Mac said in its weekly survey of lenders.

The average rate that lenders were offering for 30-year fixed home loans was 4.93% early this week, down from 5.0% a week earlier, with borrowers paying 0.7% of the loan balance in upfront charges to the lenders, the big mortgage company said.

The average rate on 15-year fixed loans was 4.30%, with 0.6% charged in upfront fees and points, down from 4.36% a week earlier.

The five-year hybrid Treasury-indexed adjustable-rate mortgage, which has a fixed rate for the first five years, averaged 3.95%, which Freddie Mac said was the lowest rate since it began tracking this popular loan type in 2005.


The European debt crisis has created strong demand for U.S. Treasury securities, driving down the yield, or effective interest rates, that they pay.

Mortgage rates generally move in concert with the yield on Treasury securities.

Mortgage professionals say well-qualified borrowers often can negotiate slightly better rates than those in the Freddie Mac survey. The catch, of course, is being well-qualified at a time when home prices have plummeted and the nation has endured the worst economic downturn since the Great Depression.

The Freddie Mac survey assumes that borrowers have good credit and make a down payment of at least 20% or have an equivalent amount of equity in their homes if they are refinancing.