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November 10, 2011

Mortgage Rates Drop, Just Above Record Lows
Mortgage giant Freddie Mac reported Thursday that the average rate for a 30-year, fixed-rate mortgage fell to 4 percent this week, almost equaling the all-time low rate for the mortgage reached at the beginning of October. Last week, the rate average 4.1 percent, but four weeks ago, it dipped to 3.94%, the only time in history it has ever fallen below 4 percent, according to the National Bureau of Economic Research.

The average rate for a 15-year fixed loan, dropped as well, Freddie said, from 3.38 percent a week ago to 3.31 percent. The 15-year also hit an all-time low four weeks ago, averaging 3.26 percent. Mortgage rates typically track the yield on the 10-year Treasury note, which the Federal Reserve has been purchasing in an attempt to keep interest rates down.

The average rate this week for a 5-year, adjustable rate mortgage, or ARM, was 2.96 percent, down from 3.08 percent a week ago. This week's rate matches a record low set four weeks ago. The average for a one-year ARM, meanwhile, fell from 2.90 percent to 2.88 percent, still above last month's 2.81 percent, the lowest on records dating back to 1984. To calculate the average rates it reports, Freddie Mac surveys hundreds of lenders around the country from Monday to Wednesday.

Despite mortgage rates hovering at or near record-low levels, the housing market continues to struggle as many potential homeowners simply cannot qualify for a loan. Many potential buyers are hesitant to take the leap because they are afraid the value of a home will fall after they buy it, and the nation's struggling labor market continues to hinder home sales, as well.

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