Mortgage rates dip back below 5%, Freddie Mac says

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The typical rate for a 30-year home loan fell below 5% this week for well-qualified borrowers as tension in the Middle East resulted in lower yields on mortgage securities.

Freddie Mac’s weekly survey of lenders, released Thursday, showed that lenders were offering the traditional fixed-rate 30-year loan at an average 4.95%, down from 5.0% last week.

The borrowers needed to have 20% down payments or equivalent home equity in the case of refinancings. They would have paid 0.6% of the loan amount to lenders upfront to obtain the mortgages, Freddie Mac said.

Rates for large mortgages are generally half a percentage point higher, with the definition of these jumbo loans varying by region.

In expensive California areas including Los Angeles and Orange counties, the breaking point is $729,750 -- for now.

That will drop to $625,500 on Oct. 1 if Congress, which increased the limit during the financial crisis, doesn’t act.

Rates on two other popular types of home loans edged down as well this week, Freddie Mac said:

--The 15-year fixed-rate mortgage this week averaged 4.22% with an average 0.7% in lender fees, down from last week when it averaged 4.27%.

--The start rate for a 5-year Treasury-indexed hybrid adjustable-rate mortgage, which has a fixed payment for the first five years, averaged 3.8% this week, with an average 0.6% of the loan balance in lender fees. That was down from 3.87% last week.

Turmoil in the Middle East has caused investors to seek the security of Treasury bonds, an increased demand that decreases the yield, or effective interest rate, on the Treasuries.

Yields on mortgage-backed securities, and by extension mortgage rates, tend to track changes in the 10-year government bond, which was trading in the 3.6% range last Friday but had fallen to 3.45% Thursday morning.

More on the mortgage rate survey is available at Freddie Mac’s website.

--E. Scott Reckard