30-year mortgage down to 5.81 percent
By Carlos Torres
Bloomberg News Service
The average rate on a benchmark 30-year fixed mortgage fell to 5.81 percent in the United States this week, the lowest in five months, according to Freddie Mac.
The 30-year rate dropped from 5.85 percent a week earlier and was the lowest since the second week of April.
The one-year adjustable rate dropped to 4.01 percent, the lowest in two months, from 4.08 percent, Freddie Mac said.
Borrowing costs have declined as the economy slowed from April through June and after recent data showed few signs of acceleration at the start of the current quarter.
"Mortgage rates eased even further this week in response to a setback in economic growth during June and possibly July," said Frank Nothaft, chief economist at Freddie Mac, the nation's second-biggest purchaser of mortgages. "Thanks in part to the low mortgage rates we have experienced thus far, 2004 will be another banner year for the housing industry."
At the current 30-year fixed rate, borrowing costs for a $100,000 mortgage would be $587 a month, compared with $615 last year at this time when the rate was 6.24 percent.
U.S. housing starts rose 8.3 percent to a 1.978 million annual rate in July, the Commerce Department reported earlier this week. Sales of new homes reached a record in May and were the second-strongest ever in June.
A report on Wednesday from the Mortgage Bankers Association showed mortgage applications rose 11.9 percent last week, reflecting more purchases and a jump in refinancing. The mortgage bankers group said its measure of refinancing rose 20.9 percent last week.
Freddie Mac said the average 15-year fixed rate, often a barometer of the costs to refinance existing loans, fell to 5.19 percent from 5.24 percent.
The amount of home equity converted into cash by home-loan refinancing probably will fall 48 percent this year to a four-year low of $71.7 billion, Freddie Mac said earlier this month.
Equity extraction using cash-out loans, or mortgages refinanced at higher balances, reached a record $138.1 billion last year and helped spur consumer spending.
