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On the Positive Side: Banks offer mortgage rates below 5%

Mortgage rates continue to drop, and some of the nation's largest banks are offering loans below 5 percent. Chase Bank advertised a 4.75 percent 30-year, fixed-rate mortgage, Wells Fargo's rate was 4.875 percent, and Bank of America was at 5 percent on their Web sites recently. The rates are for borrowers who have a 20 percent down payment and an excellent credit rating.   The new, lower rates are a result of the Federal Reserve's $500 billion purchase of mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac, and Ginnie Mae. These new lower rates should increase demand for mortgage refinancing, but it is unclear whether they will be enough to spur a growth in new mortgages.   The average rate for a 30-year mortgage dropped for the tenth consecutive week, according to Freddie Mac's weekly Primary Mortgage Market Survey, which indicated the average 30-year fixed-rate mortgage rate dropped nearly 2 percent from 5.10 percent for the week ending January 1, to 5.01 percent for the week ending January 8. The rate is down nearly 15 percent from this time last year, and is at its lowest level since Freddie Mac began tracking the data in 1971.  The Fed buy-up of mortgage-backed securities has boosted the price of securities, and in turn, dropped interest rates.   Source:

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