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Home loan rates drop yet again to record low

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Another week, another record low for home loan rates.

Freddie Mac said rates for both 30-year and 15-year fixed mortgages dropped for the ninth time in the past 10 weeks.

The mortgage giant’s weekly survey said the average rate that lenders were offering on the 30-year loan was 4.36% during the week that ended Thursday, down from 4.42% a week earlier and 5.14% a year ago. Borrowers would have paid 0.7% of the loan amount in upfront lender fees.

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This week’s average for a 15-year fixed loan was 3.86% with 0.6% paid in lender fees, Freddie Mac said. That was down from 3.90% a week earlier and 4.58% a year ago.

Amy Crews Cutts, deputy chief economist at Freddie Mac, said mortgage rates were doing what they naturally do -- tracking the yield on longterm Treasury bonds.

News this week that home sales plunged in July led investors to worry that the sluggish housing market may slow the economic recovery, she said. As a result, long-term bond yields fell to the lowest levels since January 2009.

Freddie Mac, which buys and guarantees mortgages, has reported since 1971 on the terms being offered to well-qualified borrowers on 30-year fixed-rate loans. It began surveying the terms of 15-year fixed mortgages in 1991.

Freddie Mac also tracks the Treasury-indexed 5-year hybrid adjustable rate loan -- a mortgage with a fixed rate for five years before becoming variable. The start rate on such loans averaged 3.56% this week with 0.6% point, unchanged from last week.

The survey asks lenders to report the terms they are quoting to solid borrowers who have at least 20% equity in their homes if they are refinancing or an equivalent down payment if they are buying. Solid borrowers who shop around often find slightly better deals, and can ‘buy down’ rates by paying additional upfront points. Third-party charges like appraisals and title insurance are not included.

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Rates have fallen to new lows in nine of the last 10 nine surveys and were unchanged in the 10th.

-- E. Scott Reckard

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