Mortgage rates drop to record lows

Fixed mortgage rates fell to record lows for the second week in a row, a welcome sign for a recovering housing market, economists said.

The average rate on a 30-year loan was 3.31%, the lowest since 1971, according to figures released Wednesday by mortgage giant Freddie Mac. That’s down from 3.34% last week.

The average on 15-year loans was 2.63%, down from last week’s 2.65%, also setting a record. A year ago it averaged 3.30%.

“Fixed mortgage rates continued to ease somewhat this week to record lows and should help the ongoing housing recovery,” said Frank Nothaft, vice president and chief economist at Freddie Mac.

New construction and home sales are also rising, Nothaft said. Construction was up 3.6% in October, the strongest showing since July 2008, and sales of existing homes increased 2.1% in October, exceeding forecasts.

Home-builder confidence rose for the sixth straight month to its highest reading since June 2006, according to the National Assn. of Home Builders/Wells Fargo Housing Market Index.

The lower mortgage rates have encouraged more people to refinance, usually leading to lower monthly payments and more consumer spending, which drives an estimated 70% of economic activity.

The average fee for 30-year and 15-year loans was 0.7 points, unchanged from last week.

The average rate on a five-year adjustable-rate mortgage was 2.74% with a 0.6-point fee, the same as last week.

The average rate on a one-year adjustable-rate mortgage went up to 2.56%, from 2.55% last week; the fee rose to 0.5 points from 0.3 points last week.

ALSO:

Stocks up slightly in pre-Thanksgiving session

Hiltzik: Avoiding the ‘fiscal cliff’ but falling anyway

New York sues Credit Suisse over mortgage-backed securities

[email protected]

Follow Adolfo Flores on Twitter.