The rate dropped to 5.03 percent from 5.15 percent a week earlier, Freddie Mac, the McLean, Virginia-based mortgage buyer, said today. It dipped to 4.96 percent the week of Jan. 15, the lowest since Freddie began keeping track.

“The move is relatively small,” said Donald Rissmiller, chief economist at New York-based Strategas Research Partners. “It’s not hurting anything, but it’s not a silver bullet.”

Record home-loan delinquencies, falling house prices and job losses are cutting demand for new and existing homes in the second year of the U.S. recession. Consumers are worried about job security and the continued decline in home prices that means a house purchased today may be worth less in a few months.

The U.S. jobless rate rose to 8.1 percent in February as employers reduced payrolls by 651,000, according to the Labor Department.

President Barack Obama and Congress are trying to stem foreclosures and boost housing demand with measures including a tax break of up to $8,000 for first-time homebuyers. The administration has pledged $275 billion to keep as many as 9 million borrowers in their homes.

Federal Reserve Plan

Mortgage delinquencies increased to a seasonally adjusted 7.88 percent of all loans in the fourth quarter, the highest in records going back to 1972, the Mortgage Bankers Association said last week. Loans in foreclosure rose to 3.30 percent, also an all-time high.

The Federal Reserve aims to reduce mortgage rates in part by buying mortgage-backed securities from Fannie Mae, Freddie Mac, and the Federal Home Loan Bank.

U.S. mortgage applications climbed last week, led by a rebound in refinancing as borrowing costs dropped. The Mortgage Bankers Association’s index of applications to purchase a home or refinance a loan rose 11 percent to 723.4. The group’s refinancing gauge jumped 13 percent and its purchase index gained 7.1 percent.

The 15-year mortgage rate this week fell to 4.64 percent from 4.72 percent, Freddie Mac said.

 SOURCE: Bloomberg