15-Year Mortgage Interest Rates Hit Record Low

Fifteen-year mortgage rates hit their lowest level in at least 18 years last week, dropping to an average 4.47 percent and 0.6 points, megalender Freddie Mac announced Thursday.

It's the lowest 15-year rate since the government-supported lender began keeping records back in 1991. Average rates on 30-year fixed mortgages also declined, reaching 5.03 percent with an average of 0.7 points paid.

Both declines were very modest drops of only 3 basis points from the previous week's levels, when 15-year rates stood at 4.50 and 30-year rates were at 5.07 percent.

"Interest rates for fixed-rate mortgages eased for the third consecutive week and remained at 3-month lows," said Frank Nothaft, Freddie Mac vice president and chief economist. "Interest rates for 30-year fixed-rate mortgages have averaged just above 5 percent through mid-September, which is roughly a percentage point below last year's average and suggests that 2009 may reach a record annual low since the survey began in 1971.

Despite the decline, the Mortgage Bankers Association reported on Wednesday that new mortgage applications dropped 8.6 percent for the week ending Sept. 11. Applications for mortgage refinances were down 7.4 percent, while applications for home purchase mortgages were down 10.3 percent.

Northaft credited ongoing low mortgage interest rates with boosting construction of single family homes, which had risen for five straight months before declining slightly in August. He also noted that homebuilder confidence increased in September for the third straight month, according to a National Association of Home Builders survey.

Mortgage interest rates have remained at near-record low levels since last spring, when both 30- and 15-year rates dropped sharply in March following aggressive action by the Federal Reserve to free up credit.

Freddie Mac was established by Congress in 1970 to provide stability and liquidity to mortgage markets by serving as a secondary lender on residential mortgages. It and its sister lender, Sallie Mae, are government-supported enterprises that purchase approximately 80 percent of the home mortgages issued in the U.S., thereby providing fresh capital to mortgage originators to issue new loans, as well as establishing underwriting standards that shape the mortgage market.