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Mortgage Rates Drop Slightly

Mortgage backer Freddie Mac on Thursday reported that mortgage rates dipped slightly this week after climbing from record-low rates recorded the week before. The average rate for a 30-year, fixed-rate loan was 4.10 percent this week, down from 4.11 percent a week ago and 3.94 percent two weeks ago. That was the first time the 30-year has averaged under 4 percent since records have been kept. The average rate for a 15-year fixed loan, meanwhile, went unchanged this week at 3.38 percent, after the popular refinancing option also hit a record low two weeks ago of 3.26 percent.

Despite interest rates at or near record lows for most of the year, the housing market has continued to struggle, only exhibiting brief and rare signs of life. Sales remain well below pre-recession levels, and home values are still falling in numerous markets across the country. High unemployment, declining wages, and stricter lending criteria have prevented many Americans who might otherwise buy a home from qualifying for financing.

Existing home sales dipped in September and the market is on pace to come in at about the same level as last year's sales totals, the worst the market has seen since 1987. The low interest rates have fueled a minor boom in refinancing activity, but that effect will be short-lived because so many homeowners can't qualify for new loans and most of those who can have already secured a refinance. Rates have remained below 5 percent for all but two weeks in 2011, kept down by the Federal Reserve's Treasury buying programs. Just five years ago, the average rate for a 30-year loan was above 6.5 percent at one point.

November 6, 2011

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