Fixed-Rate Mortgages Fall To New Record Low Since 1971

December 24, 2008 2:27 p.m. EST

Washington, D.C. (AHN) - Rates on 30-year fixed-rate mortgages fell this week to a record low, since Freddie Mac started doing its weekly survey in the early 1970s, for the second consecutive week.

Freddie Mac said in a survey on Wednesday that the 30-year fixed-rate mortgage averaged 5.14 percent with an average 0.8 point for the week ending Dec.24, down from last week when it averaged 5.19 percent.

A point in the mortgage rate is an upfront financing charge, which is equal to 1 percent of the mortgage. Last year in the same period, the 30-year FRM averaged 6.17 percent.

Rates have declined over the last eight weeks as economic crisis continues to worsen. Lower mortgage rates have pushed up the refinancing applications to the highest level in more than five years, according to a separate report.

"Interest rates on 30-year fixed-rate mortgages eased for the eighth straight week and set another record low since Freddie Mac's survey began in 1971," Frank Nothaft, Freddie Mac vice president and chief economist, said in the survey.

"Real GDP growth fell 0.5 percent in the third quarter of the year, pulled down by the largest drop in consumer spending since the second quarter of 1980," he added.

The housing market has consistently contracted. Existing home sales, excluding condominiums and co-ops, declined 8.6 percent in November to 4.0 million houses on annualized rate last month, reflecting the slowest pace since July 1997.

Nothaft said that the median sales price fell 12.8 percent from November 2007, the largest 12-month decline since records began in January 1968, which is based on the report from the National Association of Realtors.

Rates on 15-year fixed-rate mortgages this week averaged 4.91 percent with an average 0.7 point, down from last week when it averaged 4.92 percent. The mortgage rate has not been lower since April 1, 2004, when it averaged 4.84 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged at 5.49 percent this week, with an average 0.6 point, down from last week when it averaged 5.60 percent. A year ago, the 5-year adjustable-rate mortgages averaged at 5.90 percent.

Rates on one-year adjustable-rate mortgages averaged 4.95 percent this week with an average 0.6 point. It is up slightly from last week when it averaged 4.94 percent. At this time last year, the one-year adjustable-rate mortgages averaged 5.53 percent.