Posted on: Friday, November 21, 2003
30-year mortgage rate drops to 5.83%
Advertiser News Services
WASHINGTON — Mortgage rates fell this week, good news for people thinking about buying a home.
For the week ending Nov. 21, the average rate on 30-year mortgages was 5.83 percent, down from 6.03 percent the previous week, mortgage company Freddie Mac reported yesterday in its weekly nationwide survey.
In mid-June, rates on those benchmark mortgages slid to the lowest in more than four decades, 5.21 percent, and have bounced up and down since.
For 15-year mortgages, a popular option for refinancing, rates fell to 5.17 percent from 5.39 percent last week. Rates for one-year adjustable mortgages averaged 3.72 percent, compared with last week's 3.76 percent.
Even with the recent gyration in mortgage rates, home sales are expected to set a record high this year, economists say.
Meanwhile, the government reported Wednesday that residential construction in October reached the highest level of activity in 17 years.
Low mortgage rates have powered the housing market, an important contributor to the economy's growth.
The Mortgage Bankers Association of America said an index of home-mortgage applications rose by 5.9 percent last week from the previous week.
The nationwide averages for mortgage rates do not include add-on fees, or points. Thirty-year mortgages carried an average fee of 0.6 point this week. Fifteen-year and one-year adjustable rate mortgages each carried an average fee of 0.7 point.
A year ago, rates on 30-year mortgages averaged 6.03 percent, 15-year mortgages were 5.44 percent and one-year adjustable mortgages stood at 4.14 percent.
The drop in the 30-year fixed mortgage was the first in three weeks.
The rate is now at its lowest level since 5.77 percent for the week ended Oct. 3, according to Freddie Mac, the No. 2 purchaser of U.S. mortgages, based in McLean, Va.
Interest rates fell after some Federal Reserve officials suggested last week they might keep their benchmark borrowing rates at a 45-year low longer than anticipated. Mortgage rates generally move in step with long-term securities, such as 10-year Treasury notes.
"Our latest economic forecast calls for low inflation into the next year, and as long as that holds true, there will be little upward pressure that might force interest rates significantly higher," said Frank Nothaft, Freddie Mac's chief economist.
The low rates led U.S. mortgage lending to reach a record $1.06 trillion in the third quarter. It was the first time the dollar value of purchased and refinanced home loans rose above $1 trillion in a quarter, said Douglas Duncan, chief economist for the Mortgage Bankers Association.
A record $722.8 billion was for refinanced loans, beating the prior high of $663 billion in the second quarter, MBA said.
"We saw rates that for most of us were the lowest in our lifetime," Duncan said.
"We're not likely to see that again, so I think that quarter will come down as the all-time peak quarter for originations."
