Mortgage rates unchanged, still near record lows | Pound Ridge NY Homes

By MARCY GORDON, Associated Press

WASHINGTON — The average rate on the 30-year fixed mortgage held steady this week, staying slightly above the lowest level on record. Low mortgage rates have aided a modest housing recovery.

Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan was unchanged at 3.55 percent. In July, the rate fell to 3.49 percent, the lowest since long-term mortgages began in the 1950s.

The average on the 15-year fixed mortgage, a popular refinancing option, slipped to 2.85 percent, down from 2.86 percent last week. That’s above the record low of 2.80 percent.

Cheap mortgages have helped lift the housing market. Sales of new and previously occupied homes are well above last year’s levels. Low rates have also allowed people to refinance, which lowers monthly mortgage payments and helps boosts consumer spending.

Home prices are increasing more consistently this year, largely because the supply of homes has shrunk while sales have risen. And the number of Americans who owe more on their mortgages than their homes are worth declined in the second quarter.

Still, the housing market has a long way back. Home sales are below healthy levels. And many people are still having difficulty qualifying for home loans or can’t afford larger down payments required by banks.

Mortgage rates are low because they tend to track the yield on the 10-year Treasury note. A weaker U.S. economy and uncertainty about how Europe will resolve its debt crisis have led investors to buy more Treasury securities, which are considered safe investments. As demand for Treasurys increase, the yield falls.

To calculate average rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week.

The average does not 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 0.6 point, down from 0.7 point last week. The fee for 15-year loans was changed at 0.6.

The average rate on one-year adjustable rate mortgages was steady at 2.61 percent. The fee for one-year adjustable rate loans also was unchanged, at 0.4 point.

The average rate on five-year adjustable rate mortgages fell to 2.72 percent from 2.75 percent. The fee declined to 0.6 point from 0.7. 

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