Mortgage Rates Hit Four-Year Low

Washington, DC, Dec. 12, 2008--The average interest on a 30-year, fixed-rate mortgage dropped to 5.47 percent this week -- its lowest point in more than four years, according to a Freddie Mac survey.

But many lenders say the rates have dropped even further since Freddie Mac polled lenders on Monday, Tuesday and Wednesday.

The mortgage research firm HSH Associates said yesterday's average rate was 5.33 percent. The trade publication Inside Mortgage Finance said it was 5.09 percent based on its polling of lenders.

The dip  reflects in part the lingering effects of the Federal Reserve's announcement late last month that it would buy a sizeable chunk of mortgage-backed securities.

Immediately after the initiative was unveiled, interest rates dropped well below the 6 percent mark, fueling a wave of mortgage applications, mostly from people looking to refinance. But it was unclear if the rates would stay down as long as they have given the wild swings of the last few months.

Frank E. Nothaft, Freddie Mac's chief economist, said the recession and recently released high unemployment numbers also played a role in driving down rates.