Business

Rate on 30-year mortgage falls to 3.88 percent

WASHINGTON - The average rate on the 30-year fixed mortgage dropped near its record low this week, making home-buying and refinancing a bargain for those who qualify.

Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan fell to 3.88 percent from 3.98 percent. That’s just above the rate of 3.87 percent reached in February, the lowest since long-term mortgages began in the 1950s.

The 15-year mortgage, a popular option for refinancing, plunged to a fresh low of 3.11 percent, from 3.21 percent last week. The previous record of 3.13 percent was hit last month.

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Yet the low rates are unlikely to draw in many more people looking to buy a home or to refinance their mortgage.

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Some buyers are still skeptical about purchasing a home with prices still falling. Home appraisals that are higher or lower than the sales price have scuttled a rising number of home contracts. Many Americans are struggling with damaged credit and unstable finances.

And mortgage rates have been below 4 percent for all but one week since early December, leaving some potential buyers and refinancers unimpressed by new record lows.

Applications for new mortgages have fallen over the past month, according to the Mortgage Bankers Association. But there has been a sharp rise in the average mortgage size. The average size of mortgage applications has increased by $20,000 since December, to about $235,000 last month.

To calculate the average rates, Freddie Mac surveys lenders across the country.