Mortgage rates now below even lows of early 1950s

September 30, 2011 - 2:45 PM

WASHINGTON (AP) — Mortgage rates have skated near record lows for weeks. But now it can finally be said: Long-term rates in the United States have never been lower.

This week, the average rate on a 30-year fixed mortgage fell to 4.01 percent, mortgage buyer Freddie Mac said in its weekly report. That's the lowest since it began keeping records in 1971.

Until now, Freddie had pointed to data from the National Bureau of Economic Research showing that rates were lower in the early 1950s, when long-term mortgages typically lasted just 20 or 25 years.

But Freddie says that's no longer true: Today's average 30-year rate is even lower than the average 20- or 25-year rate was in the 1950s.

The NBER's data show that between July 1950 and February 1951, long-term rates averaged 4.08 percent. Today's average 30-year rate is 4.01 percent. Both are higher once you include the extra fees most buyers pay. Those fees are called points; one point equals 1 percent of a loan amount.

If you include fees and points comparable to today's low rates, the 1950-51 average would be 4.33 percent, Freddie Mac said Friday. Today's average on the 30-year, with extra fees factored in, is 4.17 percent.

The average on a 15-year fixed mortgage, a popular refinancing option, also ticked down to 3.28 percent this week. Economists say that's the lowest rate ever for that loan.

Mortgage rates tend to track the yield on the 10-year Treasury note, which has risen this week to around 2 percent. A week ago, it touched 1.74 percent — the lowest level since the Federal Reserve Bank of St. Louis started keeping daily records in 1962. As recently as July, the 10-year exceeded 3 percent.

Rates on mortgages could fall further after the Federal Reserve announced last week that it would take further action to try to lower long-term rates.

Still, low rates have so far done little to boost home sales or refinancing. Many would-be buyers or homeowners don't have enough cash or home equity to get a new loan.

The Freddie Mac surveys lenders across the country Monday through Wednesday of each week.