The average rate on 30-year U.S. fixed-rate mortgages dropped for a 10th consecutive week as of Thursday, to 5.01 percent, after the Federal Reserve launched its plan to lower home borrowing costs, Freddie Mac said.
The rate declined from 5.1 percent in the prior week and was the lowest ever recorded by Freddie Mac, the second-largest provider of funding for residential mortgages.
Freddie Mac’s [FRE 0.78 0.03 (+4%) ] survey began in 1971.
The Fed this week began its purchases of up to $500 billion in mortgage-backed securities issued by Freddie Mac, Fannie Mae and Ginnie Mae, resulting in sharply lower yields on the bonds that influence the rates lenders can offer consumers.
Mortgage rates began to fall after the Fed announced its plans to buy MBS in November.
Mortgage rates have dropped nearly 1.5 percentage points since October, creating a savings of about $184 per month on a $200,000 loan, Frank Nothaft, Freddie Mac’s chief economist, said in a statement.
The Fed’s move is seen as one of the most promising federal efforts to stabilize the housing market, which is in its worst downturn since the 1930s.
Still, analysts say it is not a cure-all, since tighter lending standards will prevent many borrowers from refinancing high-cost loans.
