Mortgage rates hit low of 4.36%

Mortgage Rate Trend Index

Rates keep dropping but most mortgage experts polled by Bankrate.com continue to think they couldn’t drop more. Fully half (50%) predict no change over the short term; 30% foresee a decline; and the remaining 20% expect an increase.

 NEW YORK – Aug. 27, 2010 – Mortgage rates fell to the lowest level in decades for the ninth time in 10 weeks as concerns grow that the economy is weakening.

Mortgage buyer Freddie Mac said Thursday that the average rate for a 30-year fixed loan was 4.36 percent this week, down from 4.42 percent last week. That’s the lowest since Freddie Mac began tracking rates in 1971.

The average rate on a 15-year fixed loan dropped to 3.86 percent from 3.90 percent the previous week. That’s the lowest on records starting in 1991.

Rates have fallen since spring as investors shifted money into the safety of Treasury bonds, lowering their yield. Mortgage rates tend to track those yields.

The low rates have fueled borrowers to refinance their home loans. Refinancing is at its highest level since May 2009 and made up 82.4 percent of all new loan activity.

However, low rates haven’t budged home sales, Those have been stymied by high unemployment, slow job growth and strict credit standards, and have dropped sharply since the expiration of homebuying tax credits in April.

To calculate the national average, 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.

Average rates on five-year adjustable-rate mortgages were unchanged at 3.56 percent. Rates on one-year adjustable-rate mortgages fell to an average rate of 3.52 from 3.53 percent.

The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount. The nationwide fee for loans in Freddie Mac’s survey averaged 0.7 a point for 30-year and 1-year mortgages. They averaged 0.6 of a point for 15-year and 5-year mortgages.

Copyright © 2010 The Associated Press