Rates on fixed mortgages dipped for the second straight week as Treasury yields fell.
Freddie Mac said Thursday the average rate on the 30-year mortgage dropped to 4.71 percent this week from 4.77 percent the previous week. It hit a 40-year low of 4.17 percent in November.
The average rate on the 15-year loan slipped to 4.08 percent from 4.13 percent. It reached 3.57 percent in November, the lowest level on records starting in 1991.
Treasury yields dropped after the December employment report came in weaker than expected. That drove investors to buy safer Treasury bonds, driving up prices and lowering the yields. Mortgage rates tend to track the yield on the 10-year Treasury note.
Rates had been rising since November. Investors shifted money out of Treasurys and into stocks on expectations of faster economic growth and higher inflation. Yields tend to rise on inflation fears.
The recent dip in rates has persuaded some borrowers to refinance, but would-be buyers remain hesitant. The number of homeowners looking to refinance rose last week, the Mortgage Bankers Association said Wednesday. But the ranks of people applying for a purchase mortgage slipped from the week before.
Mortgage rates aren't expected to revisit last year's historically low rates, unless the economy takes a sharp turn for the worst. And even if they do, low mortgage rates did little last year to spark flagging home sales.
Higher rates are just another obstacle facing the beleaguered housing market. High unemployment, elevated foreclosures and falling home prices are other drags on the market's recovery.
RealtyTrac Inc. said Thursday that banks took back more than 1 million homes last year, the highest tally on records dating back to 2005. One in 45 U.S. households received a foreclosure filing in 2010, up 1.67 percent from the year before. The foreclosure listing firm expects bank repossessions to peak this year at 1.2 million.
Foreclosures typically sell at a steep discount of up to 50 percent in some of the hardest-hit regions. That lowers prices of similar homes in the area. Experts predict prices will drop nationally another 5 to 10 percent before bottoming out midyear.
To calculate average mortgage rates, Freddie Mac collects rates from lenders across the country on Monday through Wednesday of each week. Rates often fluctuate significantly, even within a single day.
The average rate on a five-year adjustable-rate mortgage slipped to 3.72 percent from 3.75 percent. The five-year hit 3.25 percent last month, the lowest rate on records dating back to January 2005.
The average rate on one-year adjustable-rate home loans fell to 3.23 percent from 3.24 percent.
The rates do not include add-on fees, known as points. One point is equal to 1 percent of the total loan amount. The average fee for the 30-year loan in Freddie Mac's survey was 0.8 point. The average fee for the 15-year fixed loan and the five-year ARM was 0.7 point, and the fee for the 1-year ARM was 0.6 point.
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