MORTGAGE RATE DROPS TO 4.71%

Rate on 30-year fixed mortgage drops to 4.71 %

Janna Herron / / Associated Press

Fixed mortgage rates dipped to the lowest level of the year last week. The third straight weekly decline comes at the start of the peak buying season.
Freddie Mac said the average rate on the 30-year loan fell to 4.71 percent from 4.78 percent the previous week. That matched this year's low reached in January. But it is above the 40-year low of 4.17 percent hit in November.

The average rate on the 15-year fixed mortgage slipped to 3.89 percent from 3.97 percent. It reached 3.57 percent in November, the lowest level on records dating back to 1991.
Mortgage rates tend to track the yield on the 10-year Treasury note, which fell last week after the report showed slower growth last month in the service sector, which employs nearly 90 percent of the U.S work force. That bolsters the case for the Federal Reserve to maintain its policy of keeping interest rates low to fuel the economy.

To calculate average mortgage rates, Freddie Mac collects rates from lenders across the country on Monday through Wednesday of each week. Rates often fluctuate significantly.
The average rate on a five-year adjustable rate mortgage fell to 3.47 percent from 3.51 percent. The five-year adjustable rate loan hit 3.25 percent last month, the lowest rate on records dating back to January 2005.
The average rate on a one-year adjustable rate loan fell to 3.14 percent from 3.15 percent. That marked the lowest level on the one-year ARM in the last year.
The rates do not include add-on fees, known as points. One point is equal to 1 percent of the total loan amount. The average fee for the 30-year fixed loan and 15-year fixed loan in Freddie Mac's survey was 0.7 point. The average fee for the five-year ARM and the one-year ARM was 0.6 point.