By Vicki Needham - 08/12/10 02:44 PM EDT
Mortgage rates dropped to their lowest levels in nearly 40 years this week, further lowered by the Federal Reserve's plan to buy up $18 billion in government debt.
The average interest rate for a 30-year fixed loan was 4.4 percent this week, the lowest since Freddie Mac began tracking rates in 1971. That's down from the previous week's record of 4.49 percent and well below the 5.29 rate a year ago, mortgage giant Freddie Mac said Thursday.
"Interest rates for fixed mortgages and five-year hybrid ARMs again broke record lows this week following reports of a sluggish job market," Frank Nothaft, chief economist at Freddie Mac, said in a statement.
The average rate on a 15-year fixed loan dropped to a record low 3.92 percent, down from 3.95 percent last week.
Yields on Treasury bonds have lowered as investment has increased in the past several months. Mortgage rates have followed that trend.
The Fed is buying up government debt with an aim of lowering rates on corporate debt and mortgages as a way to convince consumers and businesses to spend more and provide a boost to the sputtering recovery.