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MORTGAGE NEWS
Rates on 30-year mortgages dip to lowest level in a month
By MARTIN CRUTSINGER
Associated Press — November 2, 2006
WASHINGTON — Rates on 30-year mortgages dropped this week to the lowest level in a month as financial markets viewed new evidence of a slowing economy as a sign that inflation will decline.
Mortgage-giant Freddie Mac reported Thursday that 30-year, fixed-rate mortgages dropped to 6.31 percent this week. That was down from 6.40 percent last week and represented the lowest level since 30-year rates were at 6.30 percent four weeks ago.
All categories of mortgages showed declines for the week, reflecting a batch of reports showing the economy slowing, a development that the Federal Reserve hopes will push inflation rates down to more acceptable levels.
The government reported last Friday that the overall economy, as measured by the gross domestic product, slowed to a sluggish growth rate of 1.6 percent in the July-September quarter, the weakest pace in more than three years.
"Lower than expected third quarter GDP figures helped to put a damper on rising rates this week," said Frank Nothaft, Freddie Mac's chief economist.
Nothaft said the lower mortgage rates may trigger a spurt of refinancing by people who want to get out of adjustable rate mortgages that are scheduled to adjust upward over the next year.
"We are also seeing a higher number of homeowners who are taking cash out of their homes for home improvement or other needs rather than opting for a prime rate home equity loan now that the prime rate is over 8 percent," Nothaft said.
After hitting records for five consecutive years, home sales and construction of new homes are down sharply this year, a slowdown that has been a major drag on the overall economy.
In an effort to dispel some of the gloom surrounding housing at present, the National Association of Realtors announced that it was beginning a series of newspaper ads proclaiming, "It's a great time to buy or sell a home."
The ads, which were to start appearing in newspapers on Friday, noted that mortgage rates have been falling recently and the near-record level of unsold homes means that buyers have more homes to choose from.
The ad quotes former Federal Reserve Chairman Alan Greenspan as saying that "most of the negatives in housing are probably behind us."
Tom Stevens, the Realtors' president, said, "The market is much better than you might hear or read."
The Freddie Mac mortgage survey showed that rates on 15-year, fixed-rate mortgages, a popular choice for refinancing, averaged 6.02 percent this week, down from 6.10 percent last week.
Rates on one-year adjustable rate mortgages fell to 5.53 percent, compared to 5.60 percent last week.
Rates on five-year adjustable rate mortgages dropped to 6.05 percent, down from 6.14 percent last week.
The mortgage rates do not include add-on fees known as points. The 30-year and 15-year mortgages each carried an average nationwide fee of 0.4 point. The one-year ARM had a nationwide average fee of 0.6 point and the five-year ARM had an average fee of 0.5 point.
A year ago, 30-year mortgages averaged 6.31 percent, the same as this week, while 15-year mortgages stood at 5.85 percent, one-year ARMs were at 5.09 percent and the five-year ARMs were at 5.76 percent. |
