The average interest rates on U.S. 30-year fixed-rate mortgages fell for a ninth consecutive week, reaching their lowest level in 37 years, according to a survey released on Wednesday by home funding company Freddie Mac.
Interest rates on the 30-year fixed-rate mortgage dropped to an average of 5.10 percent for the week ending Dec. 31, down from the previous week's 5.14 percent, Freddie Mac said. The 30-year fixed-rate mortgage has not been lower since Freddie Mac started the Primary Mortgage Market Survey in 1971.
Mortgage rates have dropped dramatically ever since the Federal Reserve unveiled a plan last month to buy up to $500 billion of mortgage securities backed by government-sponsored enterprises, Fannie Mae, Freddie Mac, and Ginnie Mae. The program also entails buying up to $100 billion of debt issued by Fannie Mae, Freddie Mac and the Federal Home Loan Banks. The Fed on Dec. 30 moved forward aggressively with an effort to drive down mortgage costs, setting a goal of buying $500 billion in mortgage-backed securities by mid-2009.
The housing market is in the worst downturn since the Great Depression as a huge supply of unsold homes, tighter lending standards and record foreclosures push down home prices. House prices fell 18% over the 12-month period ending in October, according to the S&P/Case-Shiller 20-city composite index. From its peak set in July 2006, the composite index is down 23.4%
An improvement in the housing market could portend a turnaround for the world's largest economy, which has been in a recession since late last year. The battered housing market is critical to the U.S. economy.
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