WASHINGTON Average U.S. rates on fixed mortgages fell to fresh record lows last week, a trend that has helped the housing market start to recover this year.
Mortgage buyer Freddie Mac says the average rate on the 30-year loan dipped to 3.34 percent, the lowest on records dating back to 1971. Thats down from 3.40 percent the week before and the previous record low of 3.36 percent reached last month.
The average on the 15-year fixed mortgage also dropped to 2.65 percent. Thats down from 2.69 percent the previous week and also a new record.
The average rate on the 30-year loan has been below 4 percent all year. It has fallen further since the Federal Reserve started buying mortgage bonds in September to encourage more borrowing and spending.
Low mortgage rates have helped boost sales of newly built and previously occupied homes this year. Home prices also are increasing, and builders are more confident and starting work on more new homes.
Lower rates also have persuaded more people to refinance. That usually leads to lower monthly mortgage payments and more spending. Consumer spending drives nearly 70 percent of economic activity.
Still, the housing market has a long way to a full recovery. And many people are unable to take advantage of the low rates, either because they cant qualify for stricter lending rules or they cant afford the larger down payments that many banks require.
To calculate average mortgage rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week. The average doesnt include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.
The average fee for 30-year loans was 0.7 point, unchanged from the previous week. The fee for 15-year loans also remained at 0.7 point.
The average rate on a one-year adjustable-rate mortgage declined to 2.55 percent from 2.59 percent. The fee for one-year adjustable rate loans one-tenth to 0.3 point.
The average rate on a five-year adjustable-rate mortgage ticked up to 2.74 percent from 2.73 percent. The fee was unchanged at 0.6 point.