Rates on 30-Year Mortgages Decline
Source: Associated Press/AP Online
WASHINGTON - Rates on 30-year mortgages declined for a second straight week as low mortgages continued to fuel the country's housing boom.
Mortgage giant Freddie Mac reported Thursday that rates on 30-year, fixed-rate mortgages fell to a nationwide average of 5.77 percent this week, down from last week's 5.80 percent. Rates have fallen for two weeks after hitting a four-month high of 5.89 percent the week of Aug. 11.
Analysts said the continued low mortgage rates were helping to keep housing markets red hot. Sales of new homes hit a record level in July while sales of existing homes came in at the third highest level in history.
"There is no doubt that low mortgage rates have been the driver of this phenomenal housing market," said Frank Nothaft, chief economist at Freddie Mac.
Even with the two consecutive declines, analysts said that rates should resume rising in coming weeks as the Federal Reserve continues its campaign to nudge rates higher as a way of making sure that inflation does not get out of control.
"As rates rise, housing sales will undoubtedly start to slow, but that slowdown will come from record levels," Nothaft said. Analysts are forecasting that sales of both new and existing homes will set new records this year for a fifth straight year.
Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing a home mortgage, averaged 5.35 percent this week, down from 5.40 percent last week.
One-year adjustable rate mortgages edged down slightly to 4.56 percent from 4.58 percent. Last week's level had been the highest in more than three years.
Rates on five-year hybrid adjustable rate mortgages averaged 5.30 percent this week, down from 5.34 percent last week.
The nationwide averages for mortgage rates do not include add-on fees known as points. Both the five-year and 15-year mortgages carried an average fee of 0.6 point this week. Thirty-year mortgages carried an average fee of 0.5 point while one-year ARMS had a fee of 0.7 point.
A year ago, 30-year mortgages averaged 5.82 percent, 15-year mortgages were at 5.21 percent and one-year ARMs averaged 4.05 percent.
Freddie Mac does not have historical data on the five-year ARM which it began tracking this year.
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