30-year loan rates fall to 5.04 percent

WASHINGTON — Rates for 30-year home loans edged down for the third straight week and are close to record lows reached over the spring, providing an excellent opportunity for borrowers to save money by refinancing their home loans.

The average rate for a 30-year fixed mortgage was 5.04 percent, down from 5.07 percent a week earlier, mortgage company Freddie Mac said Thursday. Rates, while above the record low of 4.78 percent hit in the spring, are still attractive for people looking to buy a home or refinance. It was the lowest weekly average since the week of May 28, when rates averaged 4.91 percent.

To prop up the housing market and help the economy revive from the worst recession since the 1930s, the Federal Reserve is spending $1.25 trillion on mortgage-backed securities, which has driven down rates on home loans.

That money is set to run out by winter, though some analysts expect the central bank to add money to the program let it last longer by gradually reducing its purchases.

Sung Won Sohn, an economics professor at California State University, Channel Islands, said rates are likely to stay low for six months or more, because the central bank does not want to imperil a recovery in the housing market and the overall economy by acting too quickly. "That would be economically and politically unwise."

Despite an extraordinary level of government intervention to prop up the mortgage market, qualifying for a loan is still tough.

Lenders have tightened their standards dramatically, so the best rates are available to those with solid credit and a 20 percent down payment.

Freddie Mac collects mortgage rates Monday through Wednesday each week from lenders around the country. Rates often fluctuate significantly, even within a given day.

The average rate on a 15-year fixed-rate mortgage fell to 4.47 percent, from 4.5 percent last week, according to Freddie Mac. That was the lowest level on records dating to 1991.

Rates on five-year adjustable-rate mortgages averaged 4.51 percent, unchanged from a week earlier. Rates on one-year adjustable-rate mortgages fell to 4.58 percent, from 4.64 percent.

The rates do not include add-on fees known as points. The nationwide fee for loans in Freddie Mac's survey averaged 0.7 points for 30-year loans and 0.6 points for 15- year mortgages. The fee averaged 0.5 points for five-year and one-year loans.