Mortgage rates slide in sour housing market
30-year fixed mortgage rate falls to 5.48% as Federal Reserve keeps key interest rate near 0%.
NEW YORK (CNNMoney.com) -- Mortgage rates fell over the past week, benefiting from the Federal Reserve's pledge to take all necessary action to stimulate the economy.
The average 30-year fixed mortgage rate fell to 5.48% from 5.59% for the week ended Jan. 28, according Bankrate.com.
The average 15-year fixed rate mortgage slipped to 5.10% from 5.2% and the average jumbo 30-year fixed rate dropped to 7.06% from 7.22%.
Adjustable rate mortgages were lower also, with the average 1-year ARM pulling back to 5.87% and the 5/1 ARM sinking 42 percentage points to 5.41%.
The Federal Reserve kept its key interest rate near 0% Wednesday, and said it is prepared to take additional steps to try to fix the troubled U.S. economy and credit markets.
"The Fed is trying to entice home buyers back into the market," said Greg McBride, senior financial analyst at Bankrate.com. "It'll take time to get buyers back into market, but it's critical to help soak up the inventory of unsold homes."
Despite the lower rates, mortgage applications plunged to levels not seen since November during the week ended Jan. 23, according to the Mortgage Bankers Association.
The Fed said it stands ready to purchase longer-term Treasurys if it determines that such a move will help get credit flowing once again. This may help lower the yield on the government bonds and further lower the rates because most of the rates are based on Treasurys.
But offsetting that move is the government's massive stimulus plans, which are being paid for through massive Treasury auctions.