Mortgage rates drop to record low

You could say Christmas has arrived early for people shopping for a home loan, with mortgage rates at or near record lows.

The average rate on a 30-year fixed-rate mortgage dropped to 4.78% in the week that ended Wednesday, tying a record set in April, home-loan buyer Freddie Mac said.

The average is based on Freddie Mac’s weekly survey, which asks about rates on loans to borrowers who have good credit and at least a 20% down payment or, for homeowners who are refinancing, at least 20% equity in their property.

Borrowers getting a 30-year fixed-rate loan paid on average 0.7% of the loan balance in upfront fees including so-called points.

Rates on 15-year fixed-rate loans were the lowest ever in Freddie Mac’s survey, averaging 4.32% with 0.6% in fees and points.

Data provider BankRate.com said the average rate on 30-year mortgages offered by large lenders surveyed by the firm dropped this week to 5%, down from 5.06% last week and a record low for the 24-year-old survey. Upfront fees averaged 0.4% of the loan amount.

A troubling sign for housing in recent weeks has been dwindling applications for loans to purchase homes, perhaps because buyers had stopped rushing to take advantage of an $8,000 federal tax credit program for first-time buyers that was set to expire.

But after Congress extended the tax credit and broadened it to include a $6,500 credit for trade-up buyers, purchase applications rose 9.6% last week after accounting for seasonal factors, the Mortgage Bankers Assn. said Wednesday. That reversed six straight weeks of purchase-loan declines in the association’s weekly surveys.

The bankers association said that the seasonally adjusted volume of overall loan applications was down 4.5% from the previous week as applications to refinance homes dropped off.

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