Mortgage rates tumble; 15-year average falls below 4%

NEW YORK — Fixed mortgage rates tumbled this week and 15-year loans dipped below 4% on average for the first time in three months.


Rates follow the yield on U.S. Treasury bonds, which fell as bond prices rose on worries that the crisis in Japan could slow economic growth.


Freddie Mac said Tuesday that the average rate on 15-year fixed mortgages, a popular refinance option, dropped to 3.97% from 4.15%. The last time the rate was below 4% was in mid-December. It reached 3.57% in November, lowest level on records dating back to 1991.


The average rate on 30-year fixed mortgages fell to 4.76% from 4.88% the previous week. It hit a 40-year low of 4.17% in November.


Mortgage rates tend to track the yield on 10-year Treasury notes. Those yields have tumbled as investors bid up the price, seeking safer investments. Bond prices and yields move in opposite directions.


Low mortgage rates haven’t been enough to jumpstart the housing market. Home construction last month plunged to its lowest level in almost two years, while building permits, an indicator of future housing activity, sank to a five-decade low, the government said this week.


Homebuilders remain pessimistic about the outlook. High unemployment, a record number of foreclosures and tough credit standards have kept many people from buying homes. And most economists don’t expect home values to bottom until midyear, another factor keeping potential homebuyers on the sidelines.


Freddie Mac collects rates from lenders across the country on Monday through Wednesday each week. Rates often fluctuate significantly, even within a single day.


The average rate on a five-year adjustable-rate mortgage fell to 3.57% from 3.73%. The five-year hit 3.25% last month, lowest rate on records dating back to January 2005.


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The average rate on one-year adjustable home loans slipped to 3.17% from 3.21%. That is the lowest level in a year for the one-year ARM.


The rates do not include add-on fees, known as points. One point is equal to 1% of the loan amount. The average fee for the 30-year fixed loan and 15-year fixed loan in Freddie Mac’s survey was 0.7 point. The average fee for the five-year ARM and the 1-year ARM was 0.6 point.