Mortgage rates decline again, likely to stay low

Associated Press

WASHINGTON — Mortgage rates around the country edged down this week, with one-year adjustable-rate mortgages dropping to their lowest level in 19 years of record keeping.

The average interest rate on a 30-year, fixed-rate mortgage dipped to 5.90 percent for this week, down slightly from 5.91 percent last week, Freddie Mac said yesterday in its latest nationwide survey of rates.

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 5.28 percent, compared with 5.31 percent last week.

Rates for one-year adjustable-rate mortgages this week dropped to 3.89 percent, the lowest level since Freddie Mac began tracking these rates in 1984. Last week's rate was 3.93 percent.

Low mortgage rates powered sales of both new homes and previously owned homes to record highs in 2002. Some economists are predicting that 2003 could turn out to be the second-best year for home sales on belief that mortgage rates will remain fairly stable.

"All indications are that mortgage rates will continue to be very affordable in the coming year," said Frank Nothaft, Freddie Mac's chief economist.

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

A year ago, rates on 30-year mortgages averaged 7.02 percent, 15-year mortgages were 6.51 percent and one-year adjustable mortgages stood at 5.12 percent.