Mortgage rates hit fresh lows on soft economy

By Lynn Adler

NEW YORK | Thu Aug 12, 2010 10:52am EDT

NEW YORK (Reuters) - Home loan rates set new lows in the latest week on more evidence of a soft U.S. economy and high unemployment, home funding company Freddie Mac said on Thursday.

The average 30-year mortgage rate fell to 4.44 percent in the week ended August 12, the lowest since Freddie Mac records began in 1971. The prior record low was 4.49 percent a week ago, which was well below 5.29 percent a year ago.

Record low mortgage rates have lifted demand to refinance loans and buy homes. But the pace has nonetheless been tepid with unemployment flirting with 10 percent, consumer confidence dim and lending standards restrictive.

The refi applications index remains at least 40 percent below the peak seen last year.

Fifteen-year mortgage rates dropped 0.03 percentage point to average 3.92 percent, the lowest since records began in 1991. And five-year Treasury-indexed adjustable-rate mortgages (ARMs) at 3.56 percent also set a record low, dating back to 2005.

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