Mortgage rates hit all-time lows

With mortgage rates tumbling to a new low, some are beginning to wonder just how far they will continue to fall.

According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average sank to a record-low 3.15% with an average 0.8 point. (Points are fees paid to a lender equal to 1% of the loan amount and are in addition to the interest rate.) It is the lowest recorded since Freddie Mac began tracking mortgage rates in 1971, and it surpassed the previous historic low of 3.23% set in late April. The 30-year fixed rate, which was 3.24% a week ago and 3.99% a year ago, has set new lows three times in just the past few months.

Freddie Mac, the federally chartered mortgage investor, aggregates rates from 125 lenders across the country to come up with national average mortgage rates. It uses rates for borrowers with flawless credit scores. These rates are not available to every borrower.

The 15-year fixed-rate average fell to 2.62% with an average 0.7 point. It was 2.7% a week ago and 3.46% a year ago. The five-year adjustable-rate average slid to 3.13% with an average 0.4 point. It was 3.17% a week ago and 3.6% a year ago.

"The low rate environment is a result of investors continuing to prefer the safety of bonds and [Federal Reserve] buying," said Danielle Hale, chief economist at Realtor.com. "Low rates are energizing home buyers with a boost in affordability and are bringing them back to the housing market, despite the swirling economic uncertainty."

As data released this week showed, the housing market is starting to rebound, no doubt buoyed by low mortgage rates. New-home sales were predicted to tank in April but instead moved slightly higher. According to U.S. Census Bureau data, new-home sales were up 1% last month.

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