Average US rate on 30-year mortgage falls to 3.92 pct.; raises prospects of loan refinancing



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WASHINGTON — Average U.S. long-term mortgage rates continued to slide this week, raising prospects of a wave of consumers refinancing their loans. The 30-year mortgage fell further below 4 percent.

Mortgage company Freddie Mac said Thursday that the nationwide average for a 30-year loan declined to 3.92 percent from 3.97 percent last week — the lowest level since June 2013. It stood at 4.53 percent back in January. The average for a 15-year mortgage, a popular choice for people who are refinancing, fell to 3.08 percent from 3.18 percent.

It was the fifth straight week that mortgage rates retreated.

The possibility of locking in a mortgage rate below 4 percent can be tantalizing for consumers. Across the country last week, homeowners and would-be homeowners eager for a bargain rate fired off inquiries to lenders.

Before last week, many bankers, lenders and borrowers had assumed that mortgage rates would soon start rising closer to a two-decade average of 6 percent. That was based on expectations that the Federal Reserve would start raising its key short-term rate next year — a move that likely would lead to higher mortgage rates.

But that assumption fell suddenly into doubt as stocks plunged last Monday and Wednesday amid fears about global economic weaknesses, the spread of Ebola and the threat of the Islamic State militia group in the Middle East.

Seeking safety, investors poured money into U.S. Treasurys. Higher demand drives up prices for those government bonds and causes their yields to drop. The yield on the 10-year note traded as low as 1.91 percent last Wednesday.

This week the yield on the benchmark Treasury note recovered to 2.22 percent Wednesday. It traded at 2.26 percent Thursday morning.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country between Monday and Wednesday each week. The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for a 30-year mortgage was unchanged from last week at 0.5 point. The fee for a 15-year mortgage also remained at 0.5 point.

The average rate on a five-year adjustable-rate mortgage slipped to 2.91 percent from 2.92 percent. The fee was steady at 0.5 point.

For a one-year ARM, the average rate rose to 2.41 percent from 2.38 percent. The fee held at 0.4 point.

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