Mortgage Rates Below 4 Percent

Home Loan Interest Rates have never been cheaper, with the 30-year rate falling below 4% for the first time in history.

The interest rate on a 30-year fixed-rate loan fell to 3.94% this week, the lowest rate since mortgage giant Freddie Mac (FMCC, Fortune 500) began tracking it. Meanwhile, the average for a 15-year fixed-rate mortgage also hit a record, falling to 3.26%.

Average 30-year conventional fixed mortgage rates fell below 4% for the first time in history this week following a sharp drop in 10-year Treasuries early in the week as concerns over a global recession grew.

Yields on the benchmark 10-year U.S. Treasury bond, which mortgage rates closely track, have been under 2% this week, closing as low as 1.78%.

The dirt-cheap mortgage rates can result in considerable savings for homeowners. Compared with just three months ago, when the 30-year was at 4.60%, borrowers today can save about $40 a month per $100,000 borrowed. That comes to a savings of nearly $14,000 for every $100,000 borrowed over the life of the 30-year loan.

The low rates have done little to boost home buying, however, according to the Mortgage Bankers Association. Their weekly survey of mortgage applications reported a drop in all loans of more than 4%. Purchase loan applications were almost flat and refinance applications fell more than 5%. (Oct 2011)