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30-year mortgage rates fall to new record low 3.49 percent

30-year mortgage rates just keep falling. This week, 30-year mortgage rates dipped to a new record, below 3.50 percent for the first time on records going back 60 years.

By Marcy GordonAP Business writer / July 27, 2012

A single family home is offered for sale in the Hollywood area of Los Angeles earlier this month. Average rates on fixed mortgages fell again this week to record lows,dipping below 3.50 percent for the first time in at least 60 years.

Damian Dovargnes/AP/File

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The average rate on the 30-year fixed mortgage fell again, this time dropping below 3.50 percent for the first time on records dating back 60 years.

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Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan declined to 3.49 percent. That's down from 3.53 percent last week and the lowest since long-term mortgages began in the 1950s.

The average rate on the 15-year fixed mortgage, a popular refinancing option, dipped to 2.80 percent. That's below last week's previous record of 2.83 percent.

The rate on the 30-year loan has fallen to or matched record-low levels in 13 of the past 14 weeks.

Cheaper mortgages have helped drive a modest but uneven housing recovery this year.

Sales of new and previously occupied homes fell in June but were higher than the same month last year. Home prices have started to stabilize in many large markets. And builders are more confident and are putting up more houses than they have in nearly four years.

Fewer Americans signed contracts to buy homes in June, the National Association of Realtors said in a separate report Thursday. The group's index of sales agreements fell to 99.3, down from May's reading of 100.7.

A reading of 100 is considered healthy. The index is 9.5 percent higher than it was a year ago. There's generally a one- to two-month lag between a signed contract and a completed deal.

Low mortgage rates could also provide some help to the economy if more people refinance. When people refinance at lower rates, they pay less interest on their loans and have more money to spend. Many homeowners use the savings on renovations, furniture, appliances and other improvements, which help drive growth.

Still, the pace of home sales remains well below healthy levels. Many people are still having difficulty qualifying for home loans or can't afford larger down payments required by banks.

The sluggish job market could deter some from making a purchase this year.

U.S. employers added only 80,000 jobs in June, a third straight month of weak hiring. The unemployment rate was unchanged at 8.2 percent, the government reported last week. Slower job creation has caused consumers to pull back on spending.

Mortgage rates have been dropping because they tend to track the yield on the 10-year Treasury note. A weaker U.S. economy and uncertainty about how Europe will resolve its debt crisis have led investors to buy more Treasury securities, which are considered safe investments. As demand for Treasurys increase, the yield falls.

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 0.7 point, unchanged from last week. The fee for 15-year loans rose to 0.7 point from 0.6 the previous week.

The average rate on one-year adjustable rate mortgages rose to 2.71 percent from 2.69 percent. The fee for one-year adjustable rate loans edged up to 0.5 point from 0.4 point.

The average rate on five-year adjustable rate mortgages jumped to 2.74 percent from 2.69 percent last week. The fee was unchanged at 0.6 point.

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