Posted on: Friday, March 26, 2004

Fixed-rate mortgages edging upward, report says

By Jeannine Aversa
Associated Press

WASHINGTON — Rates on 30-year and 15-year mortgages nudged up this week, while rates on one-year adjustable mortgages dropped to their lowest level on record.

The average rate on benchmark 30-year, fixed-rate mortgages rose to 5.40 percent, up from 5.38 percent last week, mortgage giant Freddie Mac reported yesterday in its weekly nationwide survey of mortgage rates.

In mid-June last year, rates on 30-year mortgages sank to 5.21 percent, their lowest level on record. Rates on 30-year mortgages have bounced around since then.

For 15-year, fixed-rate mortgages, a popular option for refinancing, rates this week increased slightly to 4.70 percent from 4.69 percent last week.

Rates for one-year adjustable mortgages fell this week to 3.36 percent. That was down from 3.39 percent last week and was the lowest since Freddie Mac began tracking rates on one-year ARMs in 1984.

"As long as general inflation remains in check, we expect mortgage rates will stay in their current range and that will leave open the window of opportunity for refinancers and potential home buyers," said Frank Nothaft, Freddie Mac's chief economist.

A year ago, rates on 30-year mortgages averaged 5.91 percent, 15-year mortgages were 5.21 percent and one-year adjustable mortgages stood at 3.84 percent.

The nationwide averages for mortgage rates do not include add-on fees known as points. Thirty-year and 15-year mortgages each carried an average fee of 0.7 point this week, while one-year ARMs carried an average fee of 0.6 point.

Low mortgage rates propelled home sales to record highs in 2003 and economists expects sales to be brisk for all of 2004.

The National Association of Realtors reported Thursday that sales of previously owned homes rose by 2 percent in February to an annual rate of 6.12 million.

The climate of low mortgage rates is supporting home-mortgage refinance activity. The Mortgage Bankers Association said that refinancing accounted for 63.1 percent of all mortgage applications filed last week. That was up from 62.8 percent the previous week.

"The recent drop in long-term interest rates has started a mini, mini consumer refinancing boom," said Carl Tannenbaum, chief economist at LaSalle Bank.