Rates on 30-year loans remain below 5 percent

Rates this week for 30-year home loans stayed below 5 percent for the second week in a row.

The average rate fell to 4.91 percent from 4.98 percent a week earlier, mortgage company Freddie Mac said Thursday.

Rates hit a record low of 4.78 percent in the spring, but are still attractive for people looking to buy a home or refinance.

The Federal Reserve has pumped $1.25 trillion into mortgage-backed securities to try to lower rates on mortgages and loosen credit. Rates on 30-year mortgages traditionally track yields on long-term government debt.

Last week, Congress passed a bill extending and expanding a key federal tax credit that has helped to boost sales.

Buyers who have owned their current homes at least five years would be eligible for tax credits of up to $6,500. First-time homebuyers - or anyone who hasn't owned a home in the last three years - would still get up to $8,000. To qualify, buyers have to sign a purchase agreement by April 30, 2010 and close by June 30.

However, lenders remain cautious and credit standards are tough, so the best rates are available only to borrowers with solid credit and a 20 percent down payment.

Recent data show a housing market on the mend. The National Association of Realtors said Tuesday that third-quarter home sales outpaced the previous three months and the year-ago figures, and price declines are moderating. The same day, homebuilder Toll Brothers Inc. said contracts for new homes rose 42 percent in its fiscal fourth quarter.

Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day, frequently in line with long-term Treasury bonds.

The average rate on a 15-year fixed-rate mortgage fell to 4.36 percent from 4.40 percent recorded last week, according to Freddie Mac.

Rates on five-year, adjustable-rate mortgages averaged 4.29 percent, down from last week's 4.35 percent. Rates on one-year, adjustable-rate mortgages declined to 4.46 percent from 4.47 percent.

The rates do not include add-on fees known as points. The nationwide fee for loans in Freddie Mac's survey averaged 0.7 point for 30-year loans. The fee averaged 0.6 point for 15-year, five-year and one-year loans.