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30-year mortgage hits record 3.34%

– Average rates on fixed mortgages fell to a fresh record lows last week, a trend that has helped the housing market start to recover this year.

Mortgage buyer Freddie Mac said the average rate on 30-year loans dipped to 3.34 percent, the lowest on records dating to 1971. That’s down from 3.40 percent the previous week and the previous record low of 3.36 percent reached last month.

The average on 15-year fixed mortgages also dropped to 2.65 percent. That’s down from 2.69 percent a week earlier and also a new record.

The average rate on 30-year loans has been below 4 percent all year. It has fallen further since the Federal Reserve started buying mortgage bonds in September to encourage more borrowing and spending.

Low mortgage rates have helped boost sales of newly built and previously occupied homes this year. Home prices are also increasing, and builders are more confident and starting work on more new homes.

Lower rates have also persuaded more people to refinance. That usually leads to lower monthly mortgage payments and more spending. Consumer spending drives nearly 70 percent of economic activity.

Still, the housing market has a long way to a full recovery. And many people are unable to take advantage of the low rates, either because they can’t qualify for stricter lending rules or they can’t afford the larger down payments that many banks require.

The average fee for 30-year loans was 0.7 point, unchanged from the previous week. The fee for 15-year loans also remained at 0.7 point.

The average rate on one-year adjustable-rate mortgages declined to 2.55 percent from 2.59 percent. The fee for one-year adjustable rate loans one-tenth to 0.3 point.