Posted on: Friday, March 12, 2004
Mortgage rate edges closer to record low
| • | Current mortgage rates |
By Jeannine Aversa
Associated Press
WASHINGTON — Mortgage rates fell sharply this week, with the rate on benchmark 30-year mortgages dropping to its lowest level since early July.
The average rate on 30-year, fixed-rate mortgages was 5.41 percent, Freddie Mac, the mortgage giant, reported yesterday in its weekly nationwide survey of mortgage rates.
This week's rate was down from 5.59 percent last week and marked the lowest rate since the week ending July 4, when rates averaged 5.40 percent.
Rates on 30-year mortgages sank to 5.21 percent in the middle of June, the lowest level in more than four decades. Since then rates have bounced up and down.
"Interest rates on 30-year, fixed-rate mortgages edged closer to last year's record low figures," said Frank Nothaft, Freddie Mac's chief economist.
For 15-year, fixed-rate mortgages, a popular option for refinancing, rates declined to 4.69 percent this week, compared with 4.88 percent last week.
Rates for one-year adjustable mortgages dipped to 3.41 percent, from 3.47 percent last week. This week's rate marked the lowest since Freddie Mac began tracking rates on one-year ARMs in 1984.
"Families looking to lower their monthly payments even further might consider adjustable-rate mortgages," Nothaft said.
"We predict ARMS will make up a much larger share of (mortgage) originations this year, perhaps the highest since about 1995," he said.
A year ago, rates on 30-year mortgages averaged 5.61 percent, 15-year mortgages were 4.93 percent and one-year adjustable mortgages stood at 3.68 percent.
The nationwide averages for mortgage rates do not include add-on fees known as points. Thirty-year mortgages and one-year ARMs each carried an average fee of 0.6 point this week, while 15-year mortgages carried an average fee of 0.7 point.
Low mortgage rates powered home sales to record highs in 2003. Economists expects sales to be brisk for all of 2004.
Separately, fewer homeowners were behind on their mortgage payments in the final quarter of 2003. But the share of home loans entering the foreclosure process edged up, the Mortgage Bankers Association reported yesterday.
The seasonally adjusted percentage of mortgage payments 30 or more days past due for all loans tracked fell to 4.49 percent in the fourth quarter. That was down from 4.65 percent in the previous quarter and marked the best showing since the second quarter of 2000.
"As the economic recovery continues, delinquency rates are declining from their post-recession peaks" seen in the third quarter of 2001, said Doug Duncan, the association's chief economist.
The percentage of mortgages that started the foreclosure process rose to 0.45 percent in the fourth quarter. That was up from 0.44 percent in the third quarter and was the highest since the third quarter of 2002.
Foreclosures typically lag delinquencies by a quarter or two.
