Mortgage rate touches record low at 3.49%

Low mortgage rates have fueled a modest recovery Low mortgage rates have fueled a modest recovery in home sales, both new and existing houses. This home is being built this past month in Palo Alto, Calif. The 30-year fixed mortgage rate hit a record nationally at 3.49 percent for the week of Sept. 16, 2012. Photo Credit: AP

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WASHINGTON -- The average U.S. rate on the 30-year fixed mortgage touched its record low this week and the rate on 15-year mortgage hit a record. Rates on Long Island, while slightly higher, also dropped.

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 that the average rate on the 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.

On Long Island the rate on the 30-year fixed was 3.71 percent down from 3.85 percent, according to mortgage research firm, HSH Associates at HSH.com. The 15-year fixed mortgage rate on Long Island hit 3.27 percent, down from 3.34 percent.

Low rates on mortgages have helped drive a modest housing recovery this year.

Sales of both previously occupied and newly built homes are up from last year. Home prices are rising more consistently. Builders are more confident in the market and are started more homes. And fewer Americans owe more on their mortgages than their houses are worth.

Low rates also have enabled people to refinance, which lowers monthly mortgage payments and helps boosts consumer spending.

However, the housing market has a long way back. Sales and construction rates remain below healthy levels And many people are still having trouble qualifying for home loans.

Still, the improvements have been steady and the broader economy is likely to benefit. When home prices rise, Americans typically feel wealthier and spend more -- a point made by Fed Chairman Ben Bernanke when he addressed the new stimulus measures last week.

The Fed plans to spend $40 billion a month to buy mortgage bonds for as long as it thinks necessary to make home buying more affordable. Bernanke said the Fed will keep buying the bonds until the job market improves "substantially."

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, unchanged from last week. The fee for 15-year loans also held steady at 0.6 point.

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

The average rate on five-year adjustable-rate mortgages rose to 2.76 percent from 2.72 percent. The fee was unchanged at 0.6 point.

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