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30-Year Mortgage Rate Drops Below 5 Percent

January 21, 2010 – The average rate on a 30-year fixed mortgage was 4.99 percent, down from 5.06 percent a week earlier, mortgage company Freddie Mac said Thursday. It was the third-straight weekly decline but remained above last month’s record lows.

30-year mortgage rate drops below 5 percent - MyRealInsight.com by Kent HuThe average rate on 15-year fixed-rate mortgages fell to 4.4 percent, down from 4.45 percent last week, according to Freddie Mac.  Rates on 5-year, adjustable-rate mortgages averaged 4.27 percent, down from 4.32 percent a week earlier. Rates on one-year, adjustable-rate mortgages dropped to 4.32 percent from 4.39 percent.

The nationwide fee for loans in Freddie Mac’s survey averaged 0.7 point for 30-year loans and 0.6 point for 15-year, five-year and one-year loans.

The Federal Reserve is pumping $1.25 trillion into mortgage-backed securities to try to bring down mortgage rates, but that money is set to run out next spring. The goal of the program is to make home buying more affordable and prop up the housing market. While it’s possible that the program could be extended, analysts believe the Fed is reluctant to do so.

Applications for home loans jumped 9% last week as interest rates declined for all types of mortgages, falling back to 5% for 30-year fixed loans, the industry trade association reported Wednesday.  The Mortgage Bankers Assn.’s weekly survey is showing an increase in applications for both purchase and refinance loans.

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