For the fifth time in six weeks, mortgage rates have dropped.
The rate for 30-year fixed U.S. home loans fell to 4.97 percent for the week ended today from 5.01 percent, mortgage finance company Freddie Mac said in a statement today. The average 15-year rate was 4.34 percent, according to the Mclean, Virginia-based company.

“To me these numbers say, for another week, so far so good,” Don Rissmiller, chief economist for New York-based Strategas Research Partners, said in a telephone interview. “The question that’s lingering is what happens when the Fed removes its continuing support for housing.”

A Federal Reserve program to purchase as much as $1.25 trillion worth of mortgage-backed securities helped push rates to a record low 4.71 percent in December. Fed Chairman Ben S. Bernanke yesterday reiterated the central bank’s intention to end the purchases at the end of March.

The Fed may raise the discount rate it charges commercial banks “before long,” Bernanke said, while pledging support for an “extended period” of low interest rates overall. His comments came in written testimony prepared for a House Financial Services Committee hearing that was postponed because of snow.

Low interest rates have bolstered demand for housing by making mortgage payments more affordable. The number of existing home purchase agreements signed in December rose 1 percent, following a 16.4 percent drop in November, the National Association of Realtors reported Feb. 2. An $8,000 tax credit for first-time buyers that was scheduled to expire on Nov. 30, 2009, was extended through June of this year and expanded to include a $6,000 credit for certain repeat buyers.

The Mortgage Bankers Association’s index of mortgage applications fell 1.2 percent in the week ended Feb. 5, with the purchase gauge decreasing 7 percent and the refinancing gauge increasing 1.4 percent.

Source: Bloomberg