30-year mortgage rates hit record lows 6th time this year

By Jeannine Aversa
Associated Press

WASHINGTON — Rates on 30-year mortgages dropped to a new low this week, offering Americans — who haven't done so — a good reason to jump on the home mortgage refinancing bandwagon.

Mortgage giant Freddie Mac, in its weekly nationwide survey of mortgage rates, reported yesterday that the average interest rate on 30-year fixed-rate mortgages fell to 5.98 percent, the lowest level since Freddie Mac began tracking these rates in 1971.

That not only was an improvement over last week's average rate of 6.01 percent but also represented the sixth time this year that rates on 30-year mortgages hit record lows. This week's rate barely inched out the prior low of 5.99 percent, which was set at the end of September.

Mortgage rates have been falling amid an uneven economic recovery and a roller-coaster stock market that has sent investors to the bond market, helping to push long-term rates down.

"The economy appears to be growing, albeit very slowly," said Phil Colling, economist with the Mortgage Bankers Association of America. "This growth, combined with stock market losses and no signs of inflation, have pushed interest rates down ... Until there is economic news that leads to a significant and sustained stock-market rally, we can expect interest rates to remain near their current levels," he added.

Low mortgage rates are feeding a boom in mortgage refinancing. Savings or extra cash coming out of refinancing deals is helping to support consumer spending, including home buying, amid uncertain economic times and eroding consumer confidence.

Experts are also predicting housing sales will clock in at record levels this year.

"We continue to see new records being set, both in the low costs of mortgages and in the volume of business carried out this year," said Frank Nothaft, Freddie Mac's chief economist. "Even though housing may have moderated somewhat in the last few months, current record-breaking low mortgages will stimulate demand for homes well into 2003."

Rates for 15-year fixed-rate mortgages, a popular option for refinancing, declined to 5.34 percent this week, the lowest level since Freddie Mac began tracking these rates in 1991. Last week, 15-year mortgages averaged 5.40 percent.

For one-year adjustable-rate mortgages, rates dipped to 4.23 percent, down from 4.29 percent last week.

This week's mortgage rates do not include add-on fees known as points. Each loan type carried an average 0.6 point fee this week.

A year ago, 30-year mortgages averaged 6.58 percent, 15-year mortgages were 6.06 percent and one-year ARMs stood at 5.26 percent.