U.S. mortgage rates on 30-year fixed loans have fallen to a record low after the Federal Reserve last week announced its plan to reduce borrowing costs by replacing short-term debt with more long-term debt.

The interest rates on 30-year mortgages, ending this week at a low average of 4.01 percent, have reached their lowest level since Freddie Mac began keeping such records in 1971. Rates for 15-year fixed loans also fell, from 3.29 percent last week to 3.28 percent this week. –BF

Bloomberg in the San Francisco Chronicle:

Record-low borrowing costs “are only a marginal support right now,” Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York, said in a telephone interview yesterday. “Mortgage credit is still tight and secondly, on the demand side, households are concerned about the job market and falling house prices.”

The S&P Case-Shiller index of home values in 20 U.S. cities decreased 4.1 percent in July from a year earlier, the group reported Sept. 27.

Purchases of new houses fell in August to a six-month low, Commerce Department data showed this week. Sales of previously owned homes that month rose to a five-month high, boosted by demand for lower-priced distressed properties, the National Association of Realtors said Sept. 21. The median price dropped to $168,300 from $177,300 in August 2010.

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