Average US rate on 30-year mortgage falls to 3.89 percent; 30-year loan at 3.10 percent

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WASHINGTON — Average U.S. long-term mortgage rates fell for the fourth straight week, a continuing boon for potential homebuyers.

Mortgage company Freddie Mac said Thursday the nationwide average for a 30-year mortgage declined to 3.89 percent this week from 3.97 percent last week. It is now at its lowest level since May 2013.

Rates are about a half-point lower than at the beginning of the year, when the benchmark 30-year rate stood at 4.53 percent. Rates have fallen in recent weeks amid economic slowdowns in Europe and China, and the start of a recession in Japan.

The average for a 15-year mortgage, a popular choice for people who are refinancing, declined to 3.10 percent from 3.17 percent last week.

Mortgage rates have been falling despite the recent end of the Federal Reserve's monthly bond purchases, which were intended to keep long-term interest rates low. An improving economy led the Fed in October to end the program that it launched during the 2008 financial crisis. Fed officials also have indicated that they will continue to hold shorter-term rates at near-zero levels until signs emerge of rising inflation.

The Fed's latest survey of business conditions around the U.S., released Wednesday, showed that the economy kept expanding in October and November, helped by solid gains in consumer spending, manufacturing and overall employment. The survey found many areas of strength and for the first time this year, the report didn't see a need to qualify its summary of growth by using words like "modest" and "moderate."

To calculate average mortgage rates, Freddie Mac surveys lenders across the country between Monday and Wednesday each week. The average doesn't 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 a 30-year mortgage was unchanged from last week at 0.5 point. The fee for a 15-year mortgage also remained at 0.5 point.

The average rate on a five-year adjustable-rate mortgage fell to 2.94 percent from 3.01 percent. The fee was steady at 0.5 point.

For a one-year ARM, the average rate declined to 2.41 percent from 2.44 percent. The fee held at 0.4 point.

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