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Rate on 30-Year Mortgage Falls to New Record of 4.78%

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  • Rate on 30-Year Mortgage Falls to New Record of 4.78%

    By: Reuters | 02 Apr 2009 | 11:48 AM ET

    U.S. mortgage rates slid to a record low during the past week, Freddie Mac said Thursday, as concerted government steps to reduce borrowing costs take hold.

    The average 30-year home loan rate fell 0.07 percentage point in the week ended April 2 to 4.78 percent, the lowest since Freddie Mac [FRE 0.7579 0.0179 (+2.42%) ] began tracking them on a weekly basis in 1971.

    This rate is 1.10 percentage points lower than in the same week a year ago.

    "Mortgage rates followed other interest rates lower this week amid reports of slower economic growth," Frank Nothaft, Freddie Mac's chief economist, said in a statement. "Serving as a spur to sales, housing affordability reached an all-time high in February 2009," based on a National Association of Realtors survey also dating from 1971, he added.

    Sustained low mortgage rates are needed to quell the record foreclosure wave that has slashed home prices and sales.

    Homeowners looking to cut costs by refinancing have already raced to apply for newer loans with lower rates, data from the Mortgage Bankers Association show.

    The Federal Reserve's program to buy up to $1.45 trillion of mortgage-related assets to help press and keep mortgage rates down has started working. Its purchases so far have approached 25 percent of its target amount and borrowing costs have fallen as a result.


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