Loan rates again play like broken record

WASHINGTON - The average U.S. rate on the 30-year fixed mortgage touched its record low this week, and the rate on 15-year mortgage hit a new record.

The declines followed the Fed's announcement last week that it would buy bonds to try to suppress mortgage rates and stimulate the housing market.

Mortgage buyer Freddie Mac said Thursday that the average rate on the 30-year loan dipped to 3.49 percent from 3.55 percent last week. That matched the lowest rate since long-term mortgages began in the 1950s.

The average on the 15-year fixed mortgage plunged to 2.77 percent, a new record. That's down from 2.85 percent last week and the previous record low of 2.80 percent.

Cheap mortgages have helped drive a modest housing recovery this year. And the Fed wants to keep those rates low for the foreseeable future as a way to stimulate the economy.

Last week the Fed said it plans to spend $40 billion a month to buy mortgage bonds for as long as it thinks necessary to make home buying more affordable.

Mark Vitner, senior economist at Wells Fargo, said the stimulus likely helped lower mortgage rates this week. And the Fed's bond purchases will probably push rates down even further over the next six to nine months, he suggested.