Alan Zibel, AP Real Estate Writer
USA Today

WASHINGTON — The average interest rate for a 30-year mortgage dropped to a record low of 4.71% this week, pushed down by an aggressive government campaign to reduce borrowing costs.

The rate, published Thursday by Freddie Mac, is the lowest since the mortgage finance company began tracking the data in 1971. The previous record of 4.78% was set during the week ending April 30 and matched last week.

The Federal Reserve is pumping $1.25 trillion into mortgage-backed securities to try to bring down mortgage rates, but that money is set to run out next spring. The goal of the program is to make home buying more affordable and prop up the housing market.

Despite the government support, qualifying for a loan is still tough. Lenders have tightened their standards dramatically, so the best rates are available to those with solid credit and a 20% down payment.

Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders across the country. Rates often fluctuate significantly, even within a given day, often tracking long-term Treasury bonds.

The average rate on a 15-year fixed-rate mortgage fell to a record low of 4.27%, from 4.29% last week, according to Freddie Mac.

Rates on five-year, adjustable-rate mortgages averaged 4.19%, up from 4.18%. Rates on one-year, adjustable-rate mortgages fell to 4.25% from 4.35%.

The rates do not include add-on fees known as points. One point is equal to 1% of the total loan amount.

The nationwide fee for loans in Freddie Mac’s survey averaged 0.7 points for 30-year loans. The fee averaged 0.6 points for 15-year, five-year and one-year loans.

Buyers and homeowners who want to refinance are picking up their phones. Mortgage applications rose 2% last week from a week earlier, the Mortgage Bankers Association said Wednesday, driven by a more than 4% increase in purchase applications and a nearly 2% increase in applications to refinance existing loans.

Copyright 2009 The Associated Press. All rights reserved

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