Mortgage rates reach record lows, Freddie Mac says

By Martin Crutsinger
Associated Press

WASHINGTON — Mortgage rates around the country fell this week, setting new lows that economists predicted would spell more good news for the housing industry.

The average interest rate on a 30-year, fixed-rate mortgage dipped to 5.84 percent for this week, down from 5.86 percent last week, Freddie Mac reported yesterday in its latest nationwide survey of rates.

That rate was the lowest since the mortgage giant began tracking 30-year mortgage rates in 1971. Records that reach back earlier than Freddie Mac's indicate that rate is the lowest since the early 1960s.

Rates for 15-year fixed-rate mortgages, a popular option for refinancing, edged down to 5.21 percent, compared with 5.26 percent last week. The new rate is the lowest since Freddie Mac began tracking 15-year mortgages in 1991.

Rates for one-year adjustable-rate mortgages hit a new low as well, dropping to 3.81 percent after three straight weeks at the previous low, 3.89 percent. Freddie Mac — the Federal Home Mortgage Corp. — began tracking ARM rates in 1984.

Low mortgage rates sent sales of both new and existing homes to record levels last year, and the government reported this week that construction of new homes and apartments posted a 16-year high in January, which analysts saw as a good sign the housing industry was off to another good year.

"Current record-breaking low mortgage rates are keeping demand for housing strong, even as the overall economy stumbles sluggishly into the first part of the year," said Frank Nothaft, chief economist at Freddie Mac.

He said the fact that mortgage applications are holding at high levels was a good indication that "housing will continue to prop up the economy for a while longer."

Low mortgage rates have made for brisk home-mortgage refinancing activity. As consumers swap higher-interest rate home loans for lower-interest rate ones, the extra cash has helped to support consumer spending, one of few sources of strength for the struggling economy.

This week's mortgage rates do not include add-on fees known as points. Thirty-year and 15-year mortgages each carried an average fee of 0.6 point this week, while one-year ARMs had an average 0.7 point financing fee.

A year ago, rates on 30-year mortgages averaged 6.81 percent, 15-year mortgages were 6.28 percent and one-year adjustable mortgages stood at 4.96 percent.