By Julie Haviv
NEW YORK (Reuters) - Interest rates on U.S. 30-year fixed-rate mortgages dropped for a ninth consecutive week, reaching their lowest level in 37 years, according to a survey released on Wednesday by home funding company Freddie Mac.
Interest rates on the 30-year fixed-rate mortgage dropped to an average of 5.10 percent for the week ending Wednesday, down from the previous week's 5.14 percent, Freddie Mac said.
It was the lowest rate for the 30-year fixed-rate mortgage since Freddie Mac started the Primary Mortgage Market Survey in 1971.
"Interest rates for 30-year fixed-rate mortgages fell for the ninth straight week and represented a third consecutive all-time record low since Freddie Mac's survey began in April 1971," Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement.
Mortgage rates have dropped dramatically since the Federal Reserve unveiled a plan last month to buy up to $500 billion of mortgage securities backed by government-sponsored enterprises Fannie Mae
Mortgage rates appear destined to head even lower.
The Fed on Tuesday moved forward aggressively with an effort to drive down mortgage costs, setting a goal of buying $500 billion in mortgage-backed securities by mid-2009.
The battered housing market is critical to the U.S. economy, with its impact ranging from the construction industry to the sale of appliances and furniture. An improvement in the housing market could portend a turnaround for the world's largest economy, which has been in a recession since late 2007.
The housing market is in the worst downturn since the Great Depression, as a huge supply of unsold homes, tighter lending standards and record foreclosures push down home prices.
OTHER INTEREST RATES DROP
The 15-year fixed-rate mortgage averaged 4.83 percent, down from 4.91 percent. It was the lowest rate since March 25, 2004, when the 15-year fixed-rate mortgage averaged 4.70 percent.
One-year adjustable rate mortgages, or ARMs, fell in the week to an average of 4.85 percent from 4.95 percent last week.
Freddie Mac said the "5/1" ARM, set at a fixed rate for five years and adjustable each following year, averaged 5.57 percent, compared with 5.49 percent a week earlier.
A year ago, 30-year mortgage rates averaged 6.07 percent, 15-year mortgages were at 5.68 percent and the one-year ARM was at 5.47 percent. The 5/1 ARM averaged 5.78 percent.
Lenders charged an average of 0.7 percent in fees and points on 30-year mortgages, down from 0.8 percent the previous week, while they charged an average 0.7 percent in fees and points on 15-year mortgages, unchanged from the previous week.
The 5/1 ARM fees and points were 0.7 percent, up from 0.6 percent the previous week. The one-year ARM fees and points were 0.5 percent, down from 0.6 percent the previous week.
Freddie Mac
Freddie Mac is a mortgage finance company chartered by Congress that buys mortgages from lenders and packages them into securities to sell to investors or to hold in its own portfolio.
(Editing by Leslie Adler)
