Mortgage rates drop to lowest level in over a year

Mortgage rates fell sharply this week to the lowest level in more than a year, igniting a boost in demand in the housing market.

Freddie Mac's latest Primary Mortgage Market Survey, released Thursday, showed that the average rate on the benchmark 30-year fixed mortgage dropped to 6.47% this week from 6.73% last week. The average rate on a 30-year loan was 6.96% a year ago.

"Mortgage rates plunged this week to their lowest level in over a year following the likely overreaction to a less than favorable employment report and financial market turbulence for an economy that remains on solid footing," said Sam Khater, Freddie Mac's chief economist. "The decline in mortgage rates does increase prospective homebuyers’ purchasing power and should begin to pique their interest in making a move."

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The average rate on the 15-year fixed mortgage fell to 5.63% from 5.99% last week. One year ago, the rate on the 15-year fixed note averaged 6.34%.