Mortgage rates showed a drop for the third week in a row averaging just 4.87% on a 30-year fixed rate loan, according to Freddie Mac. The average dropped to the lowest level in more than a month as lenders slashed rates to get borrowers back into the market, down from an average of 4.95% last week.
The rate on a fixed 15-year loan also fell to 4.15% with an average 0.7 point from last week when the shorter term mortgage was 4.22%. The 5-year Treasury indexed adjustable rate mortgage also declined to an average of 3.72% from 3.8% a week ago.
The drop in mortgage rates comes at an opportune time for the housing market with the spring buying season just around the corner, as spring officially beings March 20th. Typically the good weather that spring brings most of the nation produces an increase in home sales, followed by an even larger number of residential sales during the summer.
“Interest rates for 30-year fixed mortgages were almost 0.2 percentage points below this year’s high set just three weeks ago,” said Freddie Mac chief economist Frank Nothaft. “This means that homebuyers could now expect to pay $263 less per year on a $200,000 loan.
“However, housing demand still remains weak. New home sales in January were near record lows dating back to 1963 when the data began, according to the Census Bureau. Similarly, pending sales of existing homes fell for the second consecutive month in January, according to the National Association of Realtors.”
The 1-year adjustable rate mortgage tracked by the nation’s giant lender also saw a drop, falling to an average of 3.23% from 3.4% a week ago. A year earlier the same mortgage was at 4.27%.