Average 30-year mortgage rate falls below 4%

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WASHINGTON — Average U.S. mortgage rates tumbled this week. The 30-year loan hit its lowest level since June 2013 as Treasury bond yields marked new lows amid concern over global economic weakness.

It was the fourth straight week of declines for mortgage rates, making it more affordable to borrow to buy a home.

Mortgage company Freddie Mac said Thursday that the nationwide average for a 30-year loan dipped to 3.97 percent from 4.12 percent last week. The average for a 15-year mortgage, a popular choice for people who are refinancing, fell to 3.18 percent from 3.30 percent.

Mortgage rates often follow the yield on the 10-year Treasury note. The 10-year note traded at 2.13 percent Wednesday, down from 2.34 percent a week earlier. It traded at 2.11 percent Thursday morning. Bond yields rise when bond prices fall.

Treasury yields have dropped sharply on expectations that the world’s economic sluggishness could force the Federal Reserve to delay interest rate increases.

The deepening concern over the health of the world economy, and worries that global weakness could slow the U.S. economy and hurt corporate profits, played into the dizzying swoon Wednesday on Wall Street. Investors fled stocks and poured money into bonds. The Dow Jones industrial average dropped 460 points in afternoon trading, all three U.S. stock indexes were in negative territory for the year, and the so-called fear index spiked.

Mortgage rates have fallen even though the Federal Reserve appears set at the end of this month to end its monthly bond purchases, which are intended to keep long-term borrowing rates low. Yet Fed officials have indicated that they will continue to hold shorter-term rates at near-zero levels until there are signs of rising inflation.

At 3.97 percent, the 30-year rate is down from 4.53 percent at the start of the year and at its lowest point since the week of June 20, 2013, when it was 3.93 percent.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country between Monday and Wednesday each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for a 30-year mortgage was unchanged from last week at 0.5 point. The fee for a 15-year mortgage also remained at 0.5 point.

The average rate on a five-year adjustable-rate mortgage dropped to 2.92 percent from 3.05 percent. The fee was steady at 0.5 point.

For a one-year ARM, the average rate fell to 2.38 percent from 2.42 percent. The fee held at 0.4 point.

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