As interest rates on fixed-rate mortgage loans continue to slide into uncharted territory, demand for refinancings has picked up but applications for purchase loans are still at about the same level as a year ago.

Rates on 30-year fixed-rate mortgage loans averaged 4.01 percent with an average 0.7 point for the week ending Sept. 29, a new low in records dating to 1971, Freddie Mac said in releasing the results of its latest Primary Mortgage Market Survey.

As interest rates on fixed-rate mortgage loans continue to slide into uncharted territory, demand for refinancings has picked up but applications for purchase loans are still at about the same level as a year ago.

Rates on 30-year fixed-rate mortgage loans averaged 4.01 percent with an average 0.7 point for the week ending Sept. 29, a new low in records dating to 1971, Freddie Mac said in releasing the results of its latest Primary Mortgage Market Survey.

Rates on 15-year fixed-rate mortgages averaged 3.28 percent this week with an average 0.7 point, down from 3.29 percent last week and 3.75 percent a year ago, Freddie Mac said. That’s also a new low in records dating to 1991.

Last year at this time, rates on 30-year fixed-rate mortgages averaged 4.32 percent, before rising to a 2011 high of 5.05 percent in February when expectations for an economic recovery were running high.

Those expectations have been reined in by the European debt crisis, which has investors seeking safety in Treasury bonds and government-backed mortgage-backed securities (MBS) that fund most home loans.

Last week the Federal Reserve said it would move $400 billion currently invested in short-term government bonds into Treasurys with remaining maturities of six years to 30 years.

The plan, quickly dubbed "Operation Twist," also involves reinvesting principal payments on the $1 trillion the Fed holds in Fannie Mae and Freddie Mac debt back into agency-backed MBS as those investments mature.

Both moves may make bonds backed by mortgages more scarce, pushing down borrowing rates for homeowners.

The Fed’s move to sell short-term Treasurys may have had the opposite effect on adjustable-rate mortgage (ARM) loans. Bond prices and yields move in opposite directions, and Freddie Mac chief economist Frank Nothaft noted that short-term Treasurys serve as benchmarks for many ARMs.

Rates on five-year Treasury-indexed hybrid ARM loans averaged 3.02 percent with an average 0.6 point, unchanged from last week but down from 3.52 percent a year ago. The five-year ARM recorded an all-time low in records dating to 2005 during the weeks ending Sept. 1 and Sept. 8, when it averaged 2.96 percent.

For one-year Treasury-indexed ARMs, rates averaged 2.83 percent with an average 0.6 point, up from 2.82 percent last week but down from 3.48 percent a year ago. The one-year ARM hit a low in records dating back to 1984 of 2.81 percent during the week ending Sept. 15.

Looking back a week, a separate survey by the Mortgage Bankers Association showed requests for refinancings was up 11.2 percent from the week before during the week ending Sept. 23.

The MBA’s Weekly Mortgage Applications Survey showed demand for purchase loans was up a seasonally adjusted 2.6 percent from the week before, to about the same level as the same time a year ago.

Applications for purchase loans were up 4.9 percent, the MBA said, while requests for Federal Housing Administration, U.S. Department of Veterans Affairs and U.S. Department of Agriculture loans fell by 0.6 percent, likely due to the pending decline in FHA loan limits on Oct. 1 that lenders have already implemented.

Requests to refinance accounted for 79.7 percent of all mortgage applications, and just 6.1 percent of borrowers were applying for ARM loans, down from 6.7 percent the previous week.

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