Mortgage rates drop near all-time lows

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Mortgage rates sank near all-time lows this week, according to giant home-loan buyer Freddie Mac -- at least for borrowers who have survived the recession with their credit ratings still solid and able to put 20% down.

For those lucky people, the average rate for a 30-year fixed-rate mortgage during the week ending today was 4.94% with borrowers paying 0.7% of the loan amount in upfront fees and points to the lender. (Paying points, each one equivalent to 1% of the loan, can reduce the rate on the mortgage.)

It was the first time since May that Freddie’s survey showed a 30-year rate beginning with a 4, although a separate Mortgage Bankers Assn. survey last week pegged rates at under 5%.

The all-time low for the Freddie Mac survey, which began in 1971, was recorded in April, when the average 30-year fixed rate for solid borrowers dropped to 4.78% with 0.7% in lender fees and discount points.

Last year at this time, 30-year fixed loans averaged more than 6% and even a 15-year fixed loan was at 5.78%. In the Freddie Mac survey released today, 15-year fixed loans averaged 4.36% with 0.6 points, an all-time low.

Although existing home sales fell somewhat in August, it was still the second-strongest showing in 23 months, noted Freddie Mac chief economist Frank Nothaft.

‘Low mortgage rates are helping to stabilize home sales,’ Nothaft said in a Freddie Mac release that you can read here.

Why are rates so low? Thank Uncle Sam, or Uncle Ben (as in Bernanke). The Federal Reserve is in the process of buying $1.2 trillion in mortgage bonds cranked out by Freddie and other government-controlled entities.

-- E. Scott Reckard