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Mortgage rates fall to 4.98%
The Associated PressThe average rate fell to 4.98 percent from 5.03 percent a week earlier, mortgage company Freddie Mac said Thursday.
Rates had hovered below 5 percent for nearly a month until inching upward two weeks ago. They hit a record low of 4.78 percent in the spring, but still are attractive for people looking to buy a home or refinance.
The Federal Reserve has pumped $1.25 trillion into mortgage-backed securities in an effort to lower rates on mortgages and loosen credit. Rates on 30-year mortgages track yields on long-term government debt.
That, plus a federal tax credit of up to $8,000 for first-time homebuyers, has helped boost the ailing housing market.
The number of signed contracts to buy previously occupied homes rose for the eighth consecutive month in a row in September, while residential construction spending jumped by 3.9 percent, the largest gain in more than six years.
Congress is sending a bill to President Barack Obama that extends and expands the tax credit to include buyers who already own homes. The $24 billion economic package, which includes an extension on unemployment benefits, passed the Senate on Wednesday and the House on Thursday. Obama is expected to quickly sign it into law.
With the bill, buyers who have owned their current homes at least five years would be eligible for tax credits of up to $6,500. First-time homebuyers - or anyone who hasn't owned a home in the last three years - still would get up to $8,000. To qualify, buyers have to sign a purchase agreement by April 30, 2010, and close by June 30.
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