Average US 30-year mortgage rate falls to 3.80 percent

Average U.S. rates on fixed mortgages declined this week, with the US benchmark 30-year loan rate falling to 3.80 percent – a new low for the year.

As the beginning of 2014 the 30-year rate was at 4.53 percent. It is now at its lowest level since May 2013.

The average rate for a 15-year mortgage, a popular option for people who are refinancing their homes, fell from 3.20 percent last week to 3.09 percent.

The average rate for a one-year ARM fell from 2.40 percent last week to 2.38 percent.

This is not a huge surprise given that mortgage rates typically follow the yield on the 10-year Treasury note. The 10-year Treasury note has fallen to its lowest level in a year, trading at 2.14 percent on Wednesday (0.03 percent lower than the week before).

The drop in mortgage rates continues to happen even though the Federal Reserve ended its monthly bond purchasing program in October, which was set in motion to keep long-term rates as low as possible.

It looks as though the Fed is going to be announcing a rate hike sooner rather than later. However, at the most recent Fed meeting on Wednesday it announced that it will be “patient” when deciding when that will happen. Chairwoman Janet Yellen said that she doesn’t expect for there to be a hike in the first quarter of 2015.

Freddie Mac calculates average mortgage rates by surveying lenders across the country between Monday and Wednesday on a weekly basis. This average does not account for extra fees that most borrowers have to pay to get the lowest rates though, these extra fees are known as points. One point is the equivalent of 1 percent of the total amount loaned.

This week the average fee for a 30-year mortgage increase to 0.6 points from 0.5 points the previous week. The fee for a 15-year mortgage also rose to 0.6 points from 0.5 points.