Mortgage Rates Plunge AGAIN

CHICAGO 11:17am (MarketWatch) -- Mortgage rates for fixed-rate loans plummeted this week, after the Federal Reserve's actions to increase liquidity in the mortgage market, Freddie Mac's chief economist said on Thursday.

The 30-year fixed-rate mortgage averaged 5.53% for the week ending Dec. 3, down from 5.97% last week and 5.96% a year ago, according to Freddie Mac's weekly survey. The rate hasn't been lower since Jan. 24, when it averaged 5.48%.

The 15-year fixed-rate mortgage averaged 5.33% this week, down from last week's 5.74% average and 5.65% a year ago. The mortgage rate hasn't been lower since March 20, when it averaged 5.27%.

Rates on adjustable-rate mortgages didn't fall as much. Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 5.77% this week, down from 5.86% last week and 5.75% a year ago. One-year Treasury-indexed ARMs averaged 5.02% this week, down from 5.18% last week and 5.46% a year ago.

To obtain the rates, the fixed-rate mortgages required payment of an average 0.7 point, while the 5-year ARM required an average 0.6 point and the 1-year ARM required an average 0.5 point. A point is 1% of the mortgage amount, charged as prepaid interest.

"After Federal Reserve actions to increase liquidity in the mortgage market, interest rates for fixed-rate mortgages took a dive," said Frank Nothaft, Freddie Mac vice president and chief economist, in a news release. "This week's decline was the largest since the week of Oct. 23, 2008, and 30-year fixed-rate mortgage rates are now almost a full percentage point lower since the last week in October.

"The recent plunge in rates contributed to the nearly 150% jump in conventional mortgage applications over the Thanksgiving week, led by almost a 300% surge in refinances, according to the Mortgage Bankers Association. Roughly three out of four mortgage applications were for refinance transactions, up from around half during the prior week."