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Mortgage rates hit record lows

By MARTIN CRUTSINGER
AP Economics Writer

WASHINGTON Ė Average U.S. rates for 30-year and 15-year fixed mortgages fell to record lows last week, offering more incentive for Americans to buy or refinance homes.

Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan fell to 3.84 percent, the lowest since long-term mortgages began in the 1950s. Thatís below the previous record rate of 3.87 percent reached in February.

The 15-year mortgage, a popular option for refinancing, dropped to 3.07 percent, also a record. The previous record of 3.11 percent was hit three weeks ago.

Cheaper mortgage rates havenít done much to boost home sales. Rates have been below 4 percent for all but one week since early December. Yet sales of both previously occupied homes and new homes fell in March.

Analysts suspect some of that weakness reflected a warm winter, which pulled sales that would normally occur during the spring buying season into January and February.

Still, many potential buyers canít qualify for loans or afford higher down payments required by banks. Home prices in many cities continue to fall, making those that can afford to buy uneasy about entering the market. And many who can afford to buy or refinance already have taken advantage of lower rates.

Mortgage rates are lower because they tend to track the yield on the 10-year Treasury note. Mixed news on the U.S. economy and Europeís debt crisis have led investors to buy more Treasurys, which are considered safe investments. As demand for Treasurys increases, the yield falls.

To calculate the average rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week.

The average rate does not include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for 30-year loans was 0.8, up from 0.7. The fee on 15-year loans was unchaged at 0.7.

The average on one-year adjustable rate loans also dropped to a record low of 2.7 percent, down from 2.74 percent. The fee on one-year adjustable rate mortgages was unchaged at 0.6.

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