Mortgage rates going back down

Associated Press

WASHINGTON — Mortgage rates, which had been creeping higher for two weeks, retreated this week, with 30-year mortgages dipping close to the recent lows, reflecting market concerns about the economy and a war in Iraq.

The average interest rate on a 30-year, fixed-rate mortgage fell to 5.91 percent this week, down from 5.97 percent last week, the Federal Home Mortgage Corp. reported yesterday in its latest survey .

Rates on 30-year mortgages started the new year by dropping to a new low of 5.85 percent for the week ending Jan. 3. 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.

For 15-year fixed-rate mortgages, a popular option for refinancing, rates fell this week to 5.31 percent, compared with 5.36 percent last week.

Rates were also lower for one-year adjustable-rate mortgages, which fell to 3.93 percent, down from 4.03 percent last week.

"Market concerns over weak economic indicators and an increased risk of war in the Middle East pushed mortgage rates even lower this week," said Frank Nothaft, Freddie Mac's chief economist. "That and falling stock prices raised investor appeal for U.S. Treasury bonds, which in turn allowed most interest rates to drift even lower."

Nothaft said that the new mortgage lows have spurred a flood of new housing construction and should set the stage for another good year for the housing industry in 2003.

Sales of both new and existing homes are expected to set record highs in 2002 and many economists are predicting that 2003 could turn out to be the second-best year for home sales. This week's mortgage rates do not include add-on fees known as points.