Mortgage rates eased this week as economic uncertainty over the crisis in Japan and turmoil in the Middle East had investors seeking safety in bonds, including those that fund most mortgages.

Rates on 30-year fixed-rate mortgages averaged 4.76 percent with an average 0.7 point for the week ending March 17, down from 4.88 percent last week and 4.96 percent a year ago, Freddie Mac said in releasing the results of its latest Primary Mortgage Market Survey.

Rates on 30-year fixed-rate loans have retreated in recent weeks after hitting a high for the year of 5.05 percent during the week ending Feb. 10. The 30-year fixed-rate hit an all-time low in Freddie Mac records dating to 1971 of 4.17 percent during the week ending Nov. 11.

Rates on 15-year fixed-rate loans averaged 3.97 percent this week with an average 0.7 point — the best rate since December — down from 4.15 percent last week and 4.33 percent a year ago. The 15-year fixed-rate loan hit a low in records dating back to 1991 of 3.57 percent in November.

For 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans, rates averaged 3.57 percent this week with 0.6 point, down from 3.73 percent last week and 4.09 percent a year ago. The 5-year ARM hit a low in records dating to 2005 of 3.25 percent in November.

Rates on 1-year Treasury-indexed ARM averaged 3.17 percent with an average 0.6 point, down from 3.21 percent last week and 4.12 percent a year ago.

Looking back a week, a separate survey by the Mortgage Bankers Association showed borrowers were taking advantage of low rates, but mostly to refinance.

Demand for purchase loans was off 4 percent during the week ending March 11 when compared to the week before, and was down 15.5 percent from a year ago.

Applications for refinancings were up 0.9 percent from the previous week to the highest level since December, and requests for refinancings accounted for 66.4 percent of all mortgage applications.

Although many economists expect mortgage rates to rise this year, some have pushed back their timelines.

MBA economists in a March 15 forecast said they expected rates on 30-year fixed-rate loans will average 5 percent during the first and second quarter of this year, rising to an average of 5.3 percent in the third quarter, and 5.5 percent in the final three months of 2011. Just last month, MBA economists were forecasting that rates on 30-year fixed-rate loans would hit 5.5 percent in the second quarter.

The most recent MBA forecast projects rates on 30-year fixed-rate loans will continue a gradual rise next year, climbing to an average of 6.2 percent in the final three months of 2012.

The Federal Reserve’s Open Market Committee, which sets targets for short-term interest rates and sets policies for programs that also influence long-term rates, this week signaled that it’s not concerned about inflation.

The committee announced Tuesday that it will continue to buy Treasurys through the second quarter of 2011, until it reaches a target of $600 billion. That program has been dubbed "QE2," as it is the second round of "quantitative easing" implemented by the Fed to keep rates low and encourage borrowing.

As the economic recovery has picked up steam, some analysts have speculated that the Fed might abandon or scale back QE2 to ward off the threat of inflation.

Although commodity prices have risen "significantly" since last summer, and turmoil in the Middle East has contributed to a sharp run-up in oil prices in recent weeks, "longer-term inflation expectations have remained stable, and measures of underlying inflation have been subdued," the committee said.

The economic recovery "is on a firmer footing," the committee said, but the housing sector continues to be depressed, and unemployment remains elevated.

In addition to maintaining QE2, the committee said that for now, it will keep its target for the federal funds rate — the rate banks charge each other for overnight loans — at zero to 0.25 percent.

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