Mortgage rates on the highly popular 30-year fixed dropped to their lowest point in nearly five years, according to the latest report from government-sponsored entity Freddie Mac.
The average rate on the product fell to 5.47 percent during the week ending December 11, down from 5.53 percent a week earlier and 6.11 percent this time last year.
It’s now at its lowest point since March 25, 2004, when it averaged 5.40 percent.
But before you get too excited, understand that rates stand to fall a lot lower, as evidenced by remarks from FHFA boss James Lockhart, who said government efforts to ease credit conditions could push rates “well below 4 percent.”
Meanwhile, the average 15-year fixed-rate mortgage fell to 5.20 percent, down from 5.33 percent last week and 5.78 percent a year ago.
Adjustable-rate mortgages were moving in the opposite direction, with the five-year ARM up five basis points to 5.82 percent and one-year up seven basis points to 5.09 percent, which may explain their extreme unpopularity.
A year ago, the five-year averaged 5.89 percent and the one-year 5.50 percent.
Freddie Mac’s weekly survey, compiled since the 1970s, uses data from conforming mortgages with a loan-to-value of 80 percent.
Jumbo loan rates are pricing much higher, but have come down some in recent weeks. However, they still remain in the high seven to mid-eight percent range.
The big question is: will lower rates save us or actually make matters worse?
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