Home loans: Mortgage rates fall back to record lows

Home loans are the cheapest they've been in decades. A 15-year mortgage now averages 3.75 percent.

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    Anne Schaeffer fills out a form to receive more information after touring a new home for sale in the Boulevard Heights development Aug. 25 in St. Louis. For those who qualify for them, home loans are cheaper than they have been in decades.
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Rates on 30-year mortgages matched the lowest level in decades and rates on 15-year loans dropped to their lowest point in nearly 20 years.

Mortgage buyer Freddie Mac said Thursday the average rate for 30-year fixed loans fell to 4.32 percent, the lowest on records dating back to 1971. That's down from 4.37 percent the previous week and equal to the average rate reached four weeks ago.

The average rate on 15-year fixed loans fell to 3.75 percent, the lowest on records dating back to 1991.

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Rates have been at or near the lowest levels in decades since spring as investors poured money into the safety of Treasury bonds, lowering their yield. Mortgage rates tend to track those yields.

In recent weeks, Treasury yields have dipped as bond traders bet that the Federal Reserve will soon boost its Treasury purchases in the hope of giving the economy a lift. That has pushed down rates.

Still, historically low rates have done little to boost the struggling housing market, which had its worst summer in more than a decade.

Fall sales are not expected to be much better. High unemployment and weak job growth have kept people from buying homes. And many of the hardest-hit markets are bracing for a big wave of homes sold at foreclosure or short sales. A short sale is when a lender lets a homeowner sell for less than the mortgage is worth.

To calculate average mortgage rates, Freddie Mac collects rates from lenders around the country on Monday through Wednesday of each week. Rates often fluctuate significantly, even within a given day.

Rates on five-year adjustable-rate mortgages averaged 3.52 percent, down from 3.54 percent a week earlier. Rates on one-year adjustable-rate mortgages rose to an average of 3.48 percent from 3.46 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 0.8 a point for 30-year mortgages. It averaged 0.7 of a point for 15-year and 1-year mortgages and 0.6 of a point for 5-year mortgages.

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