WASHINGTON – Average U.S. rates on fixed mortgages fell to fresh record lows for the second straight week. The declines have led more homeowners to refinance, a trend that could help jumpstart the economy.
Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan dropped to 3.36 percent. That’s down from last week’s rate of 3.40 percent, which was the lowest since long-term mortgages began in the 1950s. The average on the 15-year fixed mortgage, a popular refinancing option, dipped to 2.69 percent, down from last week’s record low of 2.73 percent.
Rates are falling after the Federal Reserve started buying mortgage bonds to help strengthen a housing recovery that began earlier this year. The Fed plans to continue the program until there is substantial improvement in the job market.
Lower rates are also driving more people to refinance. Mortgage applications surged 16.6 percent last week, the Mortgage Bankers Association reported Wednesday. Of those applications, 83 percent were to refinance existing loans.
Still, some economists question whether further decline in rates will make much of a difference. The average rate on the 30-year fixed mortgage has been below 4 percent since early December.