30-year mortgage rates fall sharply

Rates on 30-year mortgages dropped sharply again this week, falling to the lowest level in seven months.

On Thursday, Freddie Mac’s nationwide survey found that 30-year, fixed-rate mortgages had declined to 5.78 percent from 5.93 percent the previous week.

It was the fifth consecutive weekly decline and dropped the 30-year mortgage rate to the lowest level since the week of Feb. 14, when it stood at 5.72 percent.

Freddie Mac says the big drop in mortgage rates is fueling a boom in refinancing, with mortgage applications up 58 percent since mid-August.

Rates have continued to fall following the U.S. government’s takeover of troubled mortgage giants Fannie Mae and Freddie Mac on Sept. 7. The government has pledged as much as $100 billion per company to shore up their capital, a move that assured a continuing flow of funds into the nation’s housing market.

Fannie Mae — officially the Federal National Mortgage Association (NYSE:FNM) — and Freddie Mac — officially the Federal Home Loan Mortgage Corp. (NYSE:FRE) — are government-sponsored, publicly traded companies that together hold or back about half of the nation’s $12 trillion worth of home mortgages.

The two mortgage guarantors have taken huge losses on a wave of home foreclosures.