Mortgage rates fell this week to the lowest level of the year. The drop was caused by a high demand for U.S. government securities, which closely track mortgage rates, as investors fled risky European debt.
The average rate on a 30-year fixed rate mortgagefrom 5 percent a week earlier, Freddie Mac said Thursday. It was the lowest level since mid-December, when rates averaged 4.81 percent.
Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day, often tracking the interest rate paid on long-term Treasury bonds.
The average fixed rate dropped to a record low of 4.71 percent late last year, pushed down by a campaign by the Federal Reserve to reduce borrowing costs for consumers. The program ended this spring, but rates have remained low, especially after fears that Greece's government would default shook world markets.
"In times of nervousness, everybody seeks the safe haven," said Greg McBride, senior financial analyst at Bankrate.com
The last time rates for 30-year fixed mortgages averaged less than 5 percent was the week of March 25, when they were 4.99 percent.
This week, the average rate on a 15-year fixed-rate mortgage was 4.3 percent, down from 4.36 percent last week.
Rates on five-year, adjustable-rate mortgages averaged 3.95 percent, down from 3.97 percent a week earlier. Rates on one-year, adjustable-rate mortgages fell to 4.02 percent from 4.07 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 nationwide fee for loans in Freddie Mac's survey averaged 0.7 of a point for 30-year loans 0.6 of a point for 15 year, 5-year and 1-year loans.