Fixed mortgage rates fell to the lowest level in six decades for the second straight week. But few Americans can take advantage of the historically low rates.
Freddie Mac said Thursday that the average rate on the 30-year fixed mortgage fell to 4.09 percent this week, down from 4.12 percent. That's the lowest rate seen since 1951.
The average rate on the 15-year mortgage, a popular refinancing option, fell to 3.30 percent from 3.33 percent. Economists say it is likely the lowest rate on the 15-year ever.
Mortgage rates tend to track the yield on the 10-year Treasury note. Worries over Europe's debt crisis are pushing investors to shift money into safe Treasurys, forcing the yield lower.
Over the past year, the average rate on the 30-year fixed mortgage has been below 5 percent for all but two weeks. That compares with five years ago, when the average 30-year fixed rate was near 6.5 percent. A decade ago, it exceeded 8 percent.
Still, cheap mortgage rates haven't helped home sales. Sales of new homes are on pace for the worst year on records dating back a half-century. The pace of re-sales is shaping up to be the worst in 14 years.
Many Americans are in no position to buy or refinance. High unemployment, scant wage gains and large debt loads have kept them away.
Others can't qualify. Banks are insisting on higher credit scores and 20 percent down payments for first-time buyers. Some homeowners have too little equity invested in their homes to meet loan requirements.
Most people must also pay extra fees to get the low mortgage rates. Those fees are known as points, with one point equaling 1 percent of the total loan amount.
The average fees for the 30-year held steady at 0.7 point. Fees paid on 15-year fixed loans and both 5-year and one-year adjustable rate loans were all at 0.6 point.
Once fees are factored in, the average rate on the 30-year loan rises from 4.09 percent to 4.25 percent, Freddie Mac said.
A drop in mortgage rates could provide some help to the economy if more people could refinance. The Obama administration is looking at expanding a government program to help more eligible homeowners refinance. When people refinance at lower rates, they pay less interest on their loans and have more money to spend.
But many homeowners with good jobs and stable finances have already refinanced in the past year. The average rate on the 30-year fixed loan fell to 4.17 percent last November, and to 4.15 percent last month. Both were previous lows.
Homeowners typically pay a few thousand dollars in closing costs when they refinance. To refinance again, most experts say rates would need to fall an additional 1 percentage point to make it worthwhile.
To calculate average mortgage rates, Freddie Mac surveys lenders across the country Monday through Wednesday of each week.
The average rate on a five-year adjustable-rate mortgage rose to 2.99 percent. That's higher than last week's 2.96 percent, the lowest records dating to January 2005 and the sixth straight week of record lows for this type of loan.
The average rate for the one-year adjustable-rate mortgage fell to 2.81 percent from 2.84 percent. That's the lowest on records going back to 1984.