Average rate on 30-year mortgage slips to 3.97%

Associated Press

Average long-term U.S. mortgage rates were mixed last week, with the key 30-year rate slipping back under the 4 percent mark.

Mortgage buyer Freddie Mac said Thursday the average rate on a 30-year fixed-rate mortgage declined to 3.97 percent from 4.01 percent a week earlier. That rate has risen from its 3.73 percent average a year ago. Still, borrowing costs are well below the historic average of 6 percent for a 30-year loan.

The average rate on 15-year fixed-rate mortgages this week rose to 3.26 percent from 3.24 percent.

Rates rose slightly in the final week of 2015 in the wake of the Federal Reserve’s decision in December to raise a key short-term interest rate.

The Fed’s move isn’t likely to drive a jump in the rates that people pay for mortgages anytime soon. The Fed’s funds rate — the rate that banks charge each other on overnight loans — has limited influence on home borrowing rates.

In the first trading days of this year, turbulence in stock markets around the globe triggered by economic instability in China has made bonds more attractive. That has pushed up prices of U.S. government bonds, whose yields move in the opposite direction of the bonds’ prices.

The yield on the 10-year Treasury bond, which mortgage rates have been tracking, fell to 2.17 percent Wednesday from 2.25 percent a week earlier. The yield remained at 2.17 percent Thursday morning.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country at the beginning of each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for a 30-year mortgage was unchanged from last week at 0.6 point. The fee for a 15-year loan fell to 0.5 point from 0.6 point.

The average rate on five-year adjustable-rate mortgages rose to 3.09 percent from 3.08 percent; the fee increased to 0.5 point from 0.4 point.

Back below 4%

The average rate on a 30-year home loan edged back to less than 4 percent last week:

30-year fixed …3.97%

15-year fixed …3.26%

5-year adjustable …3.09%

Source: Freddie Mac