As the Federal Reserve constantly making moves to keep mortgage rates low, the rates remain low and are even falling. According to the weekly report by Freddie Mac, the 30-year old fixed rate mortgage is down to an average of 4.82% whereas last week it was 4.86%. Last year, the average 30-year mortgages was about 6%.

For the past 10 weeks, as reported by Freddie Mac’s chief economist Frank Nothaft, long-term fixed-rate mortgages has been stable below 5%. This was because the US Treasury and Federal Reserve have kepet the rates low through mortgage-backed security purchases which was $136 billion through April by the Treasury and $740 billion through mid-May by the Federal Reserve. Since March, the Federal Reserve has also purchased $115 billion in Treasury bonds.

Despite a drop in housing starts, the National Home Builders Association reported an increase in homebuilder’s confidence this month, May 2009. A continued rise in mortgage application due to refinancing activities has also been reported by the Mortgage Bankers Association. 74% of all mortgage applications are applications for refinancing.

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