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Mortgage News |
Fresh US home sales record seen in 2004-Freddie Mac WASHINGTON, Feb 9 (Reuters) - Persistently low U.S. mortgage interest rates and an improving economy may translate to a new record high in home sales in 2004, economists for the No. 2 source of U.S. mortgage finance, Freddie Mac , said on Monday. Low U.S. inflation means interest rates are unlikely to rise much in the year, Freddie Mac Chief Economist Frank Nothaft said in an economic outlook. "It's a very favorable mortgage rate environment," he said in a conference call. Freddie Mac (NYSE: FRE - News ) expects total sales of new and pre-owned homes to reach 7.28 million, surpassing an anticipated record high of 7.19 million in 2003, Nothaft said. Analysts have been expecting the U.S. housing boom to taper off as interest rates rise in a recovering economy. Higher mortgage rates make houses more expensive and curb buyer appetite. But Nothaft said recent modest rises in consumer prices and policy maker comments suggest the Federal Reserve is in no hurry to raise interest rates. Fed Governor Ben Bernanke said last month the central bank could be patient with low rates because prices for items like clothing, housing and medical care are rising moderately. Low home loan interest rates and more hiring by businesses as the economy revives should provide fresh fodder for the resilient housing market, Nothaft said. He forecast interest rates for the popular 30-year fixed rate mortgage to average about 5.75 percent, roughly the same as in 2003. Mortgage interest rates fell last June to lows not seen since the early 1960s and have hovered near that level since then. Freddie Mac reported the national average long-term home loan rate was 5.72 percent last week. Housing, along with consumer spending, have been the stars of the U.S. economy as it has struggled to solidify recovery after the 2001 recession.
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