30-year fixed mortgage rate drops to 4.77%

The average rates on the 30-year fixed mortgage dropped this week to 4.77 percent from 4.86 percent the previous week, after hitting a 40-year low of 4.17 percent in November, Freddie Mac said today. The rate of the 15-year mortgage loan dipped to 4.13 percent from 4.2 percent last week, with a 40-year low of 3.57 percent recorded in November. Rates have been steadily rising since November, as investors have shifted money into stocks, the Associated Press reported. Many predict that the tax-cut plan will spur economic growth and increase inflation. However, low mortgage rates did little to boost home sales last year and higher rates now could hamper a strong recovery. According to Capital Economics, the number of borrowers who applied for a mortgage in December was 10 percent below the same month in 2009. The number of purchase applications has been rising along with sales, but last year’s sales pace was shaping up to be the slowest in 13 years. [AP via NYT]