WASHINGTON – The average U.S. rate on 15-year fixed mortgages fell last week to its lowest level on record, making refinancing and home-buying more attractive to those who can qualify.
Mortgage buyer Freddie Mac said the average rate for the 15-year fixed loan fell to 2.61 percent. Thats down from 2.64 percent the previous week and the lowest rate on records dating to 1991.
The previous record low of 2.63 percent was reached in November.
The average rate on 30-year fixed mortgages also moved closer to its record low, dropping to 3.40 percent.
Thats down from 3.41 percent a week earlier and just above the previous record of 3.31 percent, also reached in November.
Low mortgage rates are helping drive a housing recovery that began last year. Home prices are rising. Sales of new and previously occupied homes are up this year.
Builders broke ground on homes in March at the fastest annual pace in nearly five years.
Sales of new homes rebounded last month to a seasonally adjusted annual rate of 417,000, the government reported Tuesday. The increase added to evidence of a sustained housing recovery at the start of the spring buying season.
New-home sales are still below the 700,000 pace considered healthy by most economists. But the pace has increased 18.5 percent from a year ago. Most economists see more gains ahead, as housing is likely to remain a consistent driver of economic growth this year.
Mortgage rates are low because they tend to track the yield on the 10-year Treasury note, which has fallen in recent weeks.
The Federal Reserve has been buying Treasury bonds since the fall. That has helped to lower the yield.
And in recent weeks, concerns that the U.S. and global economies are slowing have led investors to shift money into safer assets, like Treasurys, and away from stocks. Greater demand for Treasurys raises their price and lowers their yield.
The yield was 1.72 percent at midday Thursday, up from 1.69 percent a week earlier but still at a historically low level.
To calculate average mortgage rates, Freddie Mac surveys lenders across the country Monday through Wednesday 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 mortgages rose to 0.8 point from 0.7 point a week earlier. The fee for 15-year loans was unchanged at 0.7 point.
The average rate on one-year adjustable-rate mortgages fell to 2.58 percent from 2.63 percent the previous week. The fee for one-year adjustable-rate loans increased to 0.5 point from 0.4.
The average rate on five-year adjustable-rate mortgages rose to 2.62 percent from 2.60 percent. The fee declined to 0.3 point from 0.5.