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US fixed mortgage rates at record lows – with further dip expected

Average on a 30-year fixed mortgage falls to 4.01% – the lowest rate since Freddie Mac began keeping records in 1971

Fixed mortgage rates have fallen to historic new lows for a fourth straight week – and are likely to fall further.

The average on a 30-year fixed mortgage fell to 4.01% this week, mortgage giant Freddie Mac said on Thursday – the lowest rate since it began keeping records in 1971. The last time long-term rates were lower was in 1951, when most long-term home loans lasted just 20 or 25 years.

The average on a 15-year fixed mortgage, a popular refinancing option, ticked down to 3.28%. Economists claim that is the lowest rate ever for the loan.

Mortgage rates tend to track the yield on the 10-year treasury note. The 10-year yield has risen this week to around 2%. A week ago, it touched 1.74% – the lowest level since the Federal Reserve Bank of St Louis started keeping daily records in 1962. As recently as July, the 10-year yield exceeded 3%.

Rates on mortgages could fall further after the Federal Reserve announced last week that it would take further action to try to lower long-term rates.

But low rates have so far done little to boost home sales or refinancing. Many would-be buyers or homeowners do not have enough cash or home equity to get a new loan.

High unemployment, scant wage gains and debt loads represent a heavy burden for many people, with others unable to qualify. Many US banks are insisting on higher credit scores and 20% down payments for first-time buyers.

This year is shaping up to be among the worst for sales of previously occupied homes in 14 years.

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