Mortgage Rates Hit Record Lows Following Fed Action

Mortgage rates hit their lowest point in half a century this week, following last week's announcement by the Federal Reserve that it would buy up more than a $1 trillion in Treasury debt and mortgage-backed securities to help free up credit.

Government-supported lender Freddie Mac reported that the average 30-year fixed rate mortgage fell to 4.85 percent for the week ending March 26, the lowest rate since the lender began its weekly survey in 1971. The financial reporting company Bankrate reported a 30-year fixed rate of 5.19 percent in its own weekly survey of large lenders, the lowest in more than 50 years.

"The Federal Reserve's announcement that it intends to purchase Treasury securities over the next six months caused bond yields to drop and mortgage rates followed," said Frank Nothaft, Freddie Mac vice president and chief economist, in a prepared statement. "Rates for 30-year fixed rate mortgages peaked last year at 6.63 percent on July 24th. With this week's 30-year fixed rate mortgage, the interest rate difference is almost 2 percentage points, which amounts to a savings of about $225 in monthly mortgage payments for a $200,000 loan."

On 15-year fixed rate mortgages, the two surveys reported an average of 4.58 percent in the Freddie Mac and 4.80 percent in the Bankrate. Five-year adjustable rate mortgages were reported at 4.96 percent and 5.21 percent, respectively, all down from the previous week.

There was a small difference in discount and origination points between the Freddie Mac and Bankrate surveys, with Freddie Mac reporting an average of 0.7 percent and Bankrate reporting 0.42.