Rate on 30-year mortgage slips to 3.34 percent

AP Business WriterJanuary 4, 2013 

WASHINGTON -- Average U.S. rates on fixed mortgages moved closer to their record lows this week, a trend that has made home buying more affordable and helped sustain a housing recovery.

Mortgage buyer Freddie Mac said Thursday that the average rate on the 30-year loan slipped to 3.34 percent from 3.35 percent last week. That's near the 3.31 percent rate reached in November, the lowest on records dating to 1971.

The average on the 15-year fixed mortgage ticked down to 2.64 percent from 2.65 percent last week. The record low is 2.63 percent.

The 30-year fixed mortgage rate averaged 3.66 percent in 2012, the lowest annual average in 65 years, according to Freddie Mac.

Cheaper mortgages are a key reason the housing market began to come back last year and many economists predict the recovery will strengthen in 2013. In November, sales of previously occupied homes rose to their highest level in three years, while new-home sales reached a 2½-year high. Home prices are steadily increasing, which makes consumers feel wealthier and more likely to spend.

Another reason for the recovery: the nation doesn't have enough houses for sale. The number of new homes available for sale at the end of November was just slightly above the lowest on records dating to 1963. And the supply of previously occupied homes for sale was at an 11-year low that month.

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