Homeowners saving with lower mortgages

The Federal Reserve's efforts to lower mortgage rates are paying off. Rates on fixed 30-year loans averaged 5.03 percent, Freddie Mac reported last week, down from 6.46 percent last year. On a $200,000 mortgage, that reduces the monthly payment by about $182 to $1,077.

Even though the Fed will slow its purchases of mortgage securities to keep help lower rates, rates for home loans should remain low -- in the 5 percent range -- as long as the purchases continue, analysts say.

Freddie Mac said half of borrowers who refinanced their conventional loan in the third quarter lowered their annual mortgage interest rate by at least 17 percent or about 1.1 percentage points below the old rate. That interest-rate reduction adds up to about $3 billion in payment savings for these homeowners over the first 12 months of the new loan, Freddie Mac said.

Staff and wire reports