U.S. Fixed Mortgage Rate Falls to Lowest on Record (Brian Louis)

  March 26 (Bloomberg) -- The U.S. 30-year fixed mortgage rate fell to 4.85 percent, the lowest on record, on a government plan to increase purchases of mortgage-backed bonds and buy up to $300 billion of Treasuries.

The average rate is the lowest in the Freddie Mac weekly survey dating back to 1971, the McLean, Virginia-based mortgage buyer said today in a statement. The rate fell from 4.98 percent a week earlier, Freddie Mac said.

The Federal Reserve said March 18 it will purchase up to an additional $750 billion of mortgage-backed securities from Fannie Mae, Freddie Mac and Ginnie Mae to support home lending. The Fed is trying to lower rates by reducing the supply of outstanding mortgage bonds, boosting their price and lowering yields. That would allow banks to reduce the rates on new mortgages and still sell mortgage securities at a profit.

The Fed announced a program in November to buy $500 billion of mortgage-backed securities guaranteed by Fannie, Freddie and Ginnie Mae. That helped drive 30-year fixed mortgage rates down to 4.96 percent for the week ended Jan. 15.

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