NEW YORK (AP) – April 9, 2009 – Rates on 30-year mortgages inched higher this week after two straight weeks of record lows, but still remained at attractive levels for borrowers looking to refinance their home loans.
Mortgage finance giant Freddie Mac said Thursday that average rates on 30-year fixed-rate mortgages rose to 4.87 percent this week from an average of 4.78 percent last week. That was the lowest in the history of Freddie Mac’s survey, which dates back to 1971.
Rates have been below 5 percent for four consecutive weeks and are still down by a full percentage point from a year ago.
Low rates have sparked a surge in refinancing activity, with nearly 80 percent of new home loan applications coming from borrowers seeking to refinance. Freddie Mac’s sibling company, Fannie Mae, refinanced $77 billion in loans last month, nearly double February’s level and the best month for such activity since 2003, while the housing market was still surging.
Speaking at the White House Thursday, President Barack Obama said millions of Americans can save money by refinancing their home loans. “We are at a time where people can really take advantage of this,” Obama said.
Obama touted the increase in refinancing nationwide as a sign that federal programs to help homeowners are working, but warned that loan modification operations that ask for money upfront are “probably a scam.”
Mortgage rates fell dramatically over the winter. They fell further after the Federal Reserve said last month it would buy $1.2 trillion in mortgage-backed securities and $300 billion in long-term government debt, which traditionally influences rates on 30-year home loans.
Frank Nothaft, Freddie Mac’s chief economist, said in a statement that low rates “should keep homeowner affordability at record levels.”
Lenders, however, have tightened their standards dramatically over the past year, so the best rates are available to those with solid credit. Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.
The average rate on a 15-year fixed-rate mortgage inched up to 4.54 percent this week from 4.52 percent last week, according to Freddie Mac.
Rates on five-year, adjustable-rate mortgages rose to 4.93 percent from 4.92 percent last week. Rates on one-year, adjustable-rate mortgages rose to 4.83 percent from 4.75 percent.
The rates do not include add-on fees known as points. The nationwide fee averaged 0.7 point last week for all mortgages in Freddie Mac’s survey except for one-year adjustable mortgages, which had an average fee of 0.5 point.
Copyright 2009 The Associated Press, Alan Zibel
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