Mortgage rates hit 4 1/2 year low

Freddie says 30-year mortgage rates dropped to 5.47% this week, continuing to fall since the Nov. 25 Fed decision to buy $500B in mortgage-backed securities.

New York (CNNMoney.com) -- Mortgage rates fell again this week, following the government's efforts to assist the troubled housing market.

Government sponsored mortgage lender Freddie Mac said Thursday that fixed rates on 30-year mortgages averaged 5.47% for the week ending Dec. 11. That's down from 5.53% last week and well below 6.11%, which is where the rate stood at this time last year.

Mortgage rates began to fall after November 25th, when the administration announced that it would pump another $800 billion into the credit markets to unfreeze consumer and mortgage lending.

Specifically, mortgage rates responded to the Federal Reserve's announcement that it would purchase up to $500 billion in mortgage backed securities backed by Fannie Mae, Freddie Mac and Ginnie Mae. It will also buy another $100 billion in direct debt issued by those firms.

Rates dipped to 5.77% on a 30-year, fixed rate loan the day after the government's announcement, down from the previous Monday's 6.06% average, according to Keith Gumbinger, vice president of HSH Associates. And the downward trend has persisted.

"What we're seeing is a slight continued decline influenced by the Federal Reserve's announcement to buy half a trillion in mortgage backed securities," Gumbinger said. "And this continued minor downdraft is also due to the poor economic climate."

The 30-year rate has not been this low since March 25th, 2004 when it averaged 5.40%.

"Following the release of the November employment report, which showed the largest monthly decline in jobs since December 1974, bond yields fell slightly this week allowing fixed-rate mortgage rates room to ease back a little further," said Frank Nothaft, Freddie Mac vice president and chief economist, in a release on Thursday.

The 15-year fixed rate mortgage this week averaged 5.20%, which is down from 5.33% last week. A year ago at this time, a 15-year fixed rate loan averaged 5.78%.

The 15-year rate has not been this low since February 7, 2008, when it averaged 5.15%.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.82% this week, up from last week when it averaged 5.77%. At this time a year ago, the 5-year ARM averaged 5.89%.

And the one-year Treasury-indexed ARM averaged 5.09% this week, up from last week when it averaged 5.02%. Last year, the 1-year ARM averaged 5.50 percent.

"The housing market still hangs in the balance," Nothaft said in a release. "On a year-over-year basis, after rising in both August and September, pending existing home sales fell 1.0% in October, based on figures from the National Association of Realtors. Meanwhile, conventional mortgage applications for home purchases over the week ending December 5th were up 2.0% from four weeks prior, but were still 51% below the same period last year, according to the Mortgage Bankers Association."