Mortgage rates drop to lowest level this year

WASHINGTON (AP) — Mortgage rates fell this week to the lowest level of the year. The drop was caused by a high demand for U.S. government securities, which closely track mortgage rates, as investors fled risky European debt.

The average rate on a 30-year fixed rate mortgage dipped to 4.93 percent this week from 5 percent a week earlier, Freddie Mac said today. It was the lowest level since mid-December, when rates averaged 4.81 percent.

Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day, often tracking the interest rate paid on long-term Treasury bonds.

The average fixed rate dropped to a record low of 4.71 percent late last year, pushed down by a campaign by the Federal Reserve to reduce borrowing costs for consumers. The program ended this spring, but rates have remained low, especially after fears that Greece's government would default shook world markets.