By Kevin Chiu
Mortgage rates dropped for the first time in weeks, falling to 4.77% down from 4.86% on a 30-year fixed rate loan, beginning the New Year on the right foot for mortgage borrowers, according to Freddie Mac.
Rates have fluctuated on home mortgages since before Christmas when they rose for four straight weeks after Treasuries sold-off following a stock market plunge. The rate on the 30-year fixed mortgage hit a bottom of 4.17% on average in late October.
Applications for home mortgages also saw their steepest rise since the beginning of 2010 at the end of the year, indicating a huge rise in purchases of homes as buyers seek out discount prices on properties. Housing affordability is at its lowest level since records have been kept in 1971, according to the National Association of Realtors.
The rate on a 15-year fixed rate mortgage also saw a drop to an average of 4.13% with a 0.8 point down from 4.20% the previous week. A year ago the same mortgage was 4.50%.
The adjustable rate five year mortgage also declined to 3.75%, a small .02 drop for the week, the weekly Freddie Mac survey found. The fluctuation in rates may be led by financial markets, which don’t seem to be able to find a solid road to recovery in many sectors, despite holding on to gains in some areas.
“Mortgage rates began the New Year a little lower this week and remained below those at the start of 2010, which should help aid the recovery in the housing market,” said Freddie Mac chief economist Frank Nothaft. “ Pending existing home sales rose for the second consecutive month in November to the strongest pace since April when the homebuyer tax credit expired.”