Mortgage rates edged down a hair this week, hovering at the lowest level in six months, with Freddie Mac reporting that lenders were offering 30-year fixed home loans at an average of 4.2% compared to 4.21% a week earlier.
The average rate for a 15-year fixed loan dropped from 3.32% to 3.29%, according to Thursday's Freddie Mac report.
The average initial rate fell from 3.05% to 3.01% on 30-year loans that become variable after five years at a fixed rate.
The latest report came amid a flurry of stories about an unexpected rally in bond markets. (When bond prices rise, interest rates go down.)
The yield on the 10-year Treasury note, a benchmark for fixed mortgages, opened this year at 3% and dipped as low as 2.5% in trading Thursday.
As the Los Angeles Times reported last week, some borrowers have been able recently to get 30-year fixed loans for just under 4%.
"These lower-than-expected rates are welcome news with the spring home-buying season under way," Freddie Mac chief economist Frank Nothaft said as the latest report was issued.
The decline, Nothaft said, "may even provide those who haven't already refinanced possibly a reason to take another look."
Freddie Mac asks lenders early each week about the terms they are offering to solid borrowers with 20% down payments or 20% equity in their homes if they are refinancing.
Freddie Mac's survey assumes that borrowers have excellent credit and pay less than 1% of the loan amount in upfront fees and discount points to their lenders. It does not include the cost of such third-party services as appraisals and title insurance.