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Freddie Mac: Average 30-year fixed rate below 5%

January 15, 2009 | 11:31 am

           As millions of would-be refinancers have realized, a Federal Reserve program to push down mortgage rates to the sub-5% level is working, although many homeowners still don't qualify for the loans. (See related stories from the Los Angeles Times and the Wall Street Journal.)

           The latest confirmation came today in a report from Freddie Mac. Freddie, of course, is one of the government-backed home loan outfits that creates the mortgage-backed securities the Fed is buying.

          While mortgage brokers have said for weeks that 30-year fixed loans are available under 5% for borrowers with good credit and sizable down payments or equity, the week ending today was the first in which Freddie said the national average had broken the 5% barrier. From the Freddie release:

        The 30-year fixed-rate mortgage (FRM) averaged 4.96 percent with an average 0.7 point for the week ending January 15, 2009, down from last week when it averaged 5.01 percent. Last year at this time, the 30-year FRM averaged 5.69 percent. The 30-year FRM has not been lower since Freddie Mac started the Primary Mortgage Market Survey in 1971.   

         The report also showed why adjustable-rate loans have all but gone the way of the dinosaurs. Loans fixed for five years that then begin to fluctuate based on government bond prices had initial start rates of 5.25% over the past week, with an average 0.6 point. Why lock in a rate like that for five years if you can get money for 30 years at 4.96%?

-- E. Scott Reckard