30- year mortgage plunges to record low

Rates reflect investors’ belief in housing as low risk, experts say.

The popular 30- year mortgage rates hit a record low, according to a Freddie Mac survey released Thursday, providing a bright spot in the economy by continuing to give consumers more incentive to buy a home.

The average for a 30- year fixedrate mortgage dropped to 2.81% from 2.87% with an average 0.6 point. ( A point is a fee borrowers pay, usually 1% of the loan, to get a better rate.) The average rate, the lowest since Freddie Mac began conducting the survey in 1971, is well below the 3.69% level a year ago.

“Investors are perceiving mortgages as a safe investment, as safe as U. S. bonds,” said Lawrence Yun, chief economist for the National Association of Realtors. “Investors see little risk in the housing market and in investing in mortgages.”

For borrowers, the difference in the 30- year fixed rate thisweek compared to this same time last year is a savings of as much as $ 190 per month on a $ 400,000 loan.

“One negative of these lowrates for buyers is that they are contributing to rising home prices,” Yun said. “One solution for buyers looking for affordability is to move farther away from the city where they can find lower prices and still benefit froml ower rates. That’s easier for people who can work from home and don’t need to commute.”

The 15- year fixed- rate average slid to 2.35% from 2.37%, with an average 0.5 point. The fiveyear adjustable- rate average of 2.90%, with an average 0.2 point, was down fromthe 2.89% of the previous week. The 15- year rate was 3.15% and the five- year was 3.35% a year ago.