Fixed Mortgage Rates Hit Four-Year Lows

Mortgage rates continued trending down for the fourth consecutive week across loan products. This week mortgage rates fell sharply with long term rates dropping to the lowest level in four years.

The main ingredient for this sharp fall has been the cut in the target federal funds rate by three-quarters of a percentage point on Tuesday. It is the largest cut since October 1984, and also the first time in more than six years that the Fed took such action outside of a scheduled Federal Open Market Committee meeting. The last time the Fed decided to ease the target federal funds rate in an unscheduled meeting was immediately after Sept. 11, 2001.

The recent movement in rates has inspired more homeowners to refinance in recent weeks. A 30-year fixed rate below 6% is indeed a bargain!

According to Freddie Mac's weekly survey, the 30-year fixed-rate mortgage went down to 5.48% from last week's average of 5.69%. A year ago, 30-year mortgages stood at 6.25%. The rate hasn't been lower since late March 2004, when it averaged 5.40%.

Rates on 15-year fixed-rate mortgages, a popular choice for refinancing, slid to 4.95%, from 5.21% last week. Rates on 15-year mortgages were at 5.98% a year ago.

The 5-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) also dropped to 5.13% from last week's average of 5.40%. The five-year ARMs averaged 6.00% at this time last year.