Steven Senne/AP/File
This December file photo, shows a for sale sign in front of a Newton, Mass., home. Fixed mortgage rates for 15- and 30-year loans have fallen to record lows.

Fixed mortgage rates hit new lows. Does anyone care?

Fixed mortgage rates for 30-year loan now average 4.18 percent. But record low fixed mortgage rates are not perking up the housing market or causing a surge of refinancing.  

Fixed mortgages rates for 15- and 30-year loans dropped to record lows this week, but it's not clear that lower interest rates are having much impact.

Not for would-be borrowers. Applications for new mortgages and refinancings are down, according to the latest survey of the Mortgage Bankers Association.

Not for the housing market. "Activity in the housing market continued to be depressed by the substantial inventory of foreclosed and distressed properties," according to minutes of the Federal Reserve's monetary policy committee meeting in December.

Nevertheless, rates continue to edge down.

Fixed mortgage rates for a 30-year loan dropped 0.03 of a percentage point to 4.18 percent, according to the Jan. 4 survey of large lenders by, an online aggregator of financial rate information. Four weeks ago, it stood at 4.24 percent.

A fixed 15-year mortgage also fell to 3.4 percent. These are the lowest rates for 15- and 30-year mortgages in the 26 years of's weekly survey.

One of the main factors keeping rates low are continuing concerns over Europe's debt crisis. Nervous about a sudden downturn there, investors are pouring money into the relative safety of US Treasury bonds. That influx of money lowers interest rates.

The Federal Reserve has also been actively trying to reduce mortgage rates by buying up mortgage-backed securities. Fed officials hope to perk up the depressed housing market by making homes cheaper to own for would-be buyers and also to put more money in the pocket of homeowners by making their mortgages less expensive. So far, the effort doesn't appear to be paying many dividends. 

"Low mortgage rates appeared to have only modest effects on the rate of mortgage refinancing," according to the minutes of the December meeting, "likely because of tight underwriting standards and low levels of home equity."

Mortgage applications fell 3.7 percent for the week ending Dec. 30, 2011, the Mortgage Bankers Association reported Wednesday. Not only were applications for a home purchase down 9.7 percent from the level two weeks earlier, even after adjusting for the holidays, applications for refinancing also fell 1.9 percent.

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