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Mortgage rates have plummeted this week to levels not seen in over a year, offering borrowers the chance to save thousands of dollars in interest costs over the life of a home loan.

So if you've been thinking about buying a house or refinancing your existing mortgage to take advantage of a lower rate, this might be the moment to make your move.

The average rate on a 30-year fixed-rate mortgage has dropped 10 basis points to 4.31%, from last week's 4.41%, reports mortgage giant Freddie Mac. A basis point is one-hundredth of 1 percentage point.

One year ago, the benchmark mortgage rate was averaging 4.44%. The loans in Freddie Mac's survey come with an average 0.4 point.

Americans are pouncing on the lower rates. Mortgage applications rose 3.6% last week, compared to the previous week, says the Mortgage Bankers Association. During February, applications for loans to buy new homes jumped 3% from a year earlier.

If you're considering a refinance, compare mortgage offers from multiple banks by visiting LendingTree.

Why rates are doing what they're doing

Real Estate: Agent Shows Home To Home Buyers
Sean Locke Photography / Shutterstock
Low mortgage rates are likely to get the attention of prospective homebuyers.

What's making mortgage rates fall? A whole mix of things, including "various market reports, a strong bond auction and further uncertainty around the Brexit deal, which all contributed to driving bond yields lower," says Sam Khater, Freddie Mac’s chief economist.

Mortgage rates tend to follow the yields on long-term U.S. Treasury bonds.

Also contributing to lower mortgage rates is the Federal Reserve's promise to be "patient" before raising interest rates again. The Fed's rate setters meet next week but are expected to leave rates alone.

Mortgage rates have been falling since November, when the 30-year fixed mortgage rate hit a seven-year high of close to 5%. Freddie Mac expects rates will rise again, though only to an average 4.7% for all of 2019.

Khater says today's low rates will capture the attention of would-be homebuyers, though he says they'll find the supply of homes for sale is "stubbornly low."

Shopping for a home loan? Calculate what your mortgage payment will be.

This week's other mortgage rates

Rates on 15-year mortgages are averaging 3.76% this week — down from 3.83% last week, Freddie Mac says. The rates on those shorter-term home loans also are below the levels from this time last year, when they were averaging 3.90%.

And 5/1 adjustable-rate mortgages — with rates that are fixed for five years and then can "adjust" up (or down) every year after that — are now being offered with initial rates averaging 3.84%, down from last week's 3.87%.

One year ago, those ARMs were offered for an average 3.67%.

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