Fixed mortgage rates hit lowest point this year

For the third consecutive week, mortgage rates have dropped to their lowest levels of the year. 

The average rate for a 30-year fixed loan fell to 4.6 percent from 4.61 percent, the lowest rate since mid-December, Freddie Mac said on Thursday. 

The average rate on the 15-year fixed mortgage dropped to 3.78 percent from 3.80, marking its lowest level since late November.

Despite record-low rates, the housing sector is still struggling to recover as the number of foreclosures glut the market, unemployment remains high and tight lending standards dominate. 

Mortgage applications increased 1.1 percent for the week ended May 20, according to data released Wednesday by the Mortgage Bankers Association. 

The refinance index increased 0.9 percent to its highest level since Dec. 10, while the purchase index increased 1.5 percent from a week earlier. The unadjusted purchase index was 3.1 percent higher than the same week one year ago, MBA said. 

The four-week moving average, which is less volatile than the weekly figure, was up 5.2 percent, and increased 1.2 percent for purchases and 7.1 percent for refinancings. 

The refinance share of mortgage activity increased to 66.8 percent of total applications from 66.7 percent the previous week. This is the highest refinance share since Jan. 28. 

Sales of new homes were up in April for the second straight month, beating expectations but remaining below levels reflecting a healthy market. 

Purchases were up 7.3 percent last month to 323,000, up from a revised 301,000 in March but 23.1 percent below the April 2010 estimate of 420,000, the Commerce Department said Tuesday. 

The market needs to nearly double sales — to about 700,000 units — to return to healthy pre-recession levels. 

Rates track yields on the 10-year Treasury note, which were slightly lower this week.