Posted on: Friday, May 30, 2003

Mortgage rates remain at record lows

By Jeannine Aversa
Associated Press

WASHINGTON — Rates on 30-year mortgages have dropped to a new low, the eighth time this year that has happened.

Average interest on a fixed-rate 30-year mortgage fell to 5.31 percent this week, the third week in a row this benchmark mortgage hit a record weekly low, Freddie Mac, the mortgage company, reported yesterday in its nationwide survey.

Last week's 5.34 percent had been the previous low in figures going back to 1971. Records that reach back earlier indicate the rate is the lowest in more than four decades, economists said.

In Hawai'i, the Honolulu Board of Realtors survey of mortgage issuers showed another record low average interest rate of 4.38 percent for a fixed-rate 15-year mortgage, while the average for a 30-year loan inched higher to 5.10 percent.

Low mortgage rates propelled home sales to record levels last year. And this year is shaping up to be the second-best for sales of both existing homes and new ones, economists say.

The housing market is one of the few bright spots of the lackluster economy.

"Low rates combined with the uptick in consumer confidence are strong indications that the housing market will continue to prosper into the summer months," said Frank Nothaft, Freddie Mac's chief economist.

For 15-year fixed-rate mortgages, a popular option for refinancing, rates remained unchanged at 4.73 percent this week, the lowest since Freddie Mac began tracking them in 1991. Rates for one-year adjustable mortgages, however, nudged up this week to 3.63 percent from 3.61 percent.

Low mortgage rates also pushed mortgage refinancing to a record level last year, something that has played a key role in supporting consumer spending. Consumers used the money saved on their monthly mortgage payments to make other purchases.

The Mortgage Bankers Association of America reported that refinancing accounted for 77.1 percent of all mortgage applications filed last week, up from 76 percent.

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

A year ago, rates on 30-year mortgages averaged 6.76 percent, 15-year mortgages were 6.22 percent and one-year adjustable mortgages stood at 4.76 percent.