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Average US rate on 30-year mortgage falls to 3.71 per cent

WASHINGTON – Average long-term U.S. mortgage rates declined this week after three straight weeks of increases. The decline could be a spur to prospective buyers as the spring home buying season gets started.

Mortgage buyer Freddie Mac said Thursday the average rate on a 30-year, fixed-rate mortgage slipped to 3.71 per cent from 3.73 per cent last week. The benchmark rate is above the 3.69 per cent level it marked a year ago.

The average rate on 15-year fixed-rate mortgages eased to 2.96 per cent from 2.99 per cent last week.

After the Federal Reserve’s decision last week to keep a key interest rate unchanged in light of global economic pressures, prices of U.S. government bonds have risen sharply. That has pushed down the yields on the bonds, which mortgage rates follow.

The yield on the 10-year Treasury bond stood at 1.87 per cent Wednesday, down from 1.91 per cent a week earlier. The yield declined further to 1.85 per cent Thursday morning.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country at the beginning of each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 per cent of the loan amount.

The average fee for a 30-year mortgage was unchanged from last week at 0.5 point. The fee for a 15-year loan also held steady, at 0.4 point.

Rates on adjustable five-year mortgages averaged 2.89 per cent this week, down from 2.93 per cent last week. The fee remained at 0.5 point.