Mortgage rates hit lows of the year

Fixed mortgage rates fell this week to the lowest point of the year, offering incentive for homeowners to save money by refinancing their loans.

Freddie Mac said Thursday that the average rate on the 30-year loan fell to 4.61 percent. That's down from 4.63 percent and the lowest level since mid-December.

The average rate on the 15-year fixed mortgage, a popular refinance option, slipped to 3.80 percent from 3.82 percent. That marked the lowest point since late November.

Rates track the yield on the 10-year Treasury note, which fell to the lowest level of the year this week.

Low rates haven't been enough to jumpstart the weak housing market. Fewer people bought previously occupied homes in April, the National Association of Realtors said Thursday. Sales fell to a seasonally adjusted annualrate of 5.05 million units, far below the 6 million homes a year that economists consider a healthy market.

However, the number of borrowers looking to refinance is now at the highest level since the second week of December, according to the Mortgage Bankers Association. Refinance activity has increased 33 percent over the last five weeks, mirroring the steady decline in rates.

Despite the gains, refinancing is only at half the level it reached in the fall of last year when mortgage rates fell to record lows. The rate on the 30-year home loan hit a four-decade low of 4.17 percent in November. The 15-year mortgage rate reached 3.57 percent that same month, the lowest level on records dating back to 1991.

"We're not seeing a (refinancing) boom by any means," said Pava Leyrer, president of Heritage NationalMortgage in Michigan.

She said many borrowers refinanced when rates were lower last year. Others don't have enough equity in their homes because values have fallen too much or their credit isn't polished enough for them to qualify.

And those who may shave off a percentage point or more from their mortgage rate face higher closing costs this year because of a recent fee increases for appraisals, title insurance and other costs. That could offset any savings from an interest rate reduction.

"If it's purely a rate decision, the difference needs to be one and a half percentage points," said Ritch Workman, co-owner of Workman Mortgage in Melbourne, Fla.

Workman has noticed an uptick in applications for purchase mortgages. Would-be buyers are taking advantage of the combination of low rates and declining home prices.

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 rose to 3.48 percent from 3.41 percent. The five-year adjustable-rate loan hit 3.25 percent last month, the lowest rate on records dating back to January 2005.

The average rate on a one-year adjustable-rate loan also increased to 3.15 percent from 3.11 percent, the lowest level for the rate in the last year.

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 fixed loan and 15-year fixed loan in Freddie Mac's survey was 0.7 point. The average fee for the five-year ARM and the 1-year ARM was 0.6 point.