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Record low mortgage rates drop even lower

Record low mortgage rates push the average 30-year loan to 3.91 percent. But can these record low mortgage rates last?

Record low mortgage rates fall to 3.91 percent. This Dec. 13, 2011 photo, shows a for-sale sign in front of a Newton, Mass.

Steven Senne/AP

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The average rate on the 30-year fixed mortgage fell to a record 3.91 percent this week, the third time this year that rates have hit new lows.

Freddie Mac said Thursday that the average on the 30-year home loan fell from 3.94 percent the previous week. The 3.91 percent rate is the lowest average for long-term fixed mortgages on records dating to the 1950s

The average on the 15-year fixed mortgage was unchanged this week at 3.21 percent. That's also a record.

Low rates offer a historic opportunity for those who can afford to buy a home or refinance. But many Americans either can't take advantage of the rates or have already done so.

Rates have been below 5 percent for all but two weeks in 2011. Even so, this year is shaping up to be one of the worst ever for home sales.

Rates could fall further still. Many economists think the yield on the 10-year Treasury note could creep lower in 2012. Long-term mortgage rates tend to track the 10-year Treasury yield.

Should the Federal Reserve launch a new program of bond purchases in the coming months to try to help the economy, it could further drive down mortgage rates.

Frank Nothaft, Freddie Mac's chief economist, has said that despite the super-low loan rates, foreclosures and falling home values have created obstacles for would-be buyers.

But builders could see more interest from buyers in the coming months if mortgage rates stay low. The low rates contributed to a modest 2-point increase in builder sentiment in the latest National Association of Home Builders survey released this month, said Yelena Shulyatyeva, an analyst at BNP Paribas. Those rates, coupled with falling prices, could draw more people into the market, she said.

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