15-year mortgage rates dip below 4 percent

August 6, 2010 at 12:00a.m.

Associated Press

WASHINGTON

A plunge in mortgage rates is giving homeowners a rare opportunity to lock in a 15-year fixed-rate loan for less than 4 percent.

Rates haven’t dipped this low in decades. For those who can qualify, it’s the chance to pay off a home in half the time while saving tens of thousands of dollars — if not more.

But the lower rates on short-term loans are not likely to ignite the refinancing market. Most people can’t afford the higher monthly payments required by a 15-year fixed mortgage compared with a more- traditional 30-year loan.

High unemployment, slow job growth and tight credit have hampered the housing industry. And fewer people are in position to refinance, because low real-estate prices have left many with little equity in their homes. Many people who would qualify already have refinanced in the past year.

The average rate on the 15-year fixed loan dropped to 3.95 percent last week, according to mortgage company Freddie Mac. That’s the lowest on records the company has kept since 1991.

The average rate for a 30-year fixed loan fell to 4.49 percent.

Rates haven’t been that low since the 1950s, when longer-term mortgages typically lasted 20 to 25 years.