You choose, we deliver
If you are interested in this story, you might be interested in others from The Journal Gazette. Go to and pick the subjects you care most about. We'll deliver your customized daily news report at 3 a.m. Fort Wayne time, right to your email.

Home loan rates drop to new lows

– Average U.S. rates on fixed mortgages fell to fresh record lows for the second straight week. The declines have led more homeowners to refinance, a trend that could help jump-start the economy.

Mortgage buyer Freddie Mac said Thursday the rate on 30-year loans dropped to 3.36 percent. That’s down from the previous week’s rate of 3.40 percent, which was the lowest since long-term mortgages began in the 1950s.

The average on 15-year fixed mortgages, a popular refinancing option, dipped to 2.69 percent, down from the previous week’s record low of 2.73 percent.

Rates are falling after the Federal Reserve started buying mortgage bonds to help strengthen a housing recovery that began earlier this year. The Fed plans to continue the program until there is substantial improvement in the job market.

Sales of both previously occupied and newly built homes are up from last year. Home prices are rising more consistently. And builders are more confident in the market and are starting to build more homes.

Lower rates are also driving more people to refinance. Mortgage applications surged 16.6 percent two weeks ago, the Mortgage Bankers Association reported Wednesday. Of those applications, 83 percent were to refinance existing loans.

Growth in refinancing could help the broader economy. When people refinance their mortgages at lower interest rates, their monthly payments typically decline. That leaves them with more money to spend. Consumer spending drives nearly 70 percent of economic activity.

Still, some economists question whether further decline in rates will make much of a difference. The average rate on 30-year fixed mortgages has been below 4 percent since early December.

Despite this fact, home sales remain below healthy levels. And most people who can qualify have likely already taken advantage of the lower rates.

Many people who would like to refinance or buy a home can’t because they fail to meet stricter lending requirements or don’t have enough money to make a down payment.