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Mortgage rates sink to record low for eighth straight week

August 12, 2010 |  8:50 am

Freddie Mac's survey of rates offered by mortgage lenders is showing record lows for the eighth straight week.

Reports of slower than expected growth in the private job market quelled inflation fears, making investors more willing to accept lower returns on mortgage securities and therefore the loans backing the bonds, Freddie Mac economist Frank Nothaft said.

For solid borrowers paying 0.7% of the loan balance in upfront fees and points, the offering rate for a 30-year fixed-rate home loan averaged 4.44% for the week ending Thursday, said Freddie Mac, the giant government-supported mortgage buyer and generator of mortgage securities. That compared with 4.49% a week ago and 5.29% a year earlier.

Fifteen-year fixed mortgages were being offered at an average 3.92% with 0.6% of the balance paid upfront, down from 3.95% the previous week and 4.68% a year ago.

For variable-rate loans with the first five years fixed, the initial rate was 3.56% with 0.7% in fees this week, down from 3.63% last week and 4.75% a year earlier.

Can the rates go still lower? It has seemed unlikely for months now -- but this week's decision by the Federal Reserve to buy U.S. government debt can only exert more downward pressure.

-- E. Scott Reckard