WASHINGTON: The average interest rate on the 30-year fixed mortgage touched its record low this week and the rate on the 15-year mortgage hit a new record.
The declines followed the Federal Reserve announcement last week that it would buy bonds to try to push mortgage rates lower and stimulate the housing market.
Mortgage buyer Freddie Mac said Thursday the average 30-year loan declined to 3.49 percent from 3.55 percent last week. That matched the lowest rate since long-term mortgages began in the 1950s.
The average on the 15-year fixed mortgage, a popular refinancing option, plunged to 2.77 percent, a record. That’s down from 2.85 percent last week and the previous record low of 2.80 percent.
Last week the Fed said it plans to spend $40 billion a month to buy mortgage bonds for as long as it thinks necessary to make home buying more affordable.
Mark Vitner, senior economist at Wells Fargo, said the stimulus likely helped lower mortgage rates this week. And the Fed’s bond purchases will probably push rates down even further over the next six to nine months, Vitner suggested.
Sales of both previously occupied and newly built homes are up from last year. Prices are rising more consistently. And builders are more confident and are starting more homes.
Still, sales and construction remains below healthy levels. And most people who can qualify have likely taken advantage of lower rates.