Posted on: Friday, May 21, 2004
Mortgage rates drop after 8-week climb
| • | Current mortgage rates |
By Jeannine Aversa
Associated Press
WASHINGTON — Rates on 30-year mortgages took a dip this week, breaking an eight-week climb.
Freddie Mac reported yesterday that rates on benchmark 30-year fixed-rate mortgages fell to 6.30 percent, down slightly from 6.34 percent last week, according to the mortgage giant's nationwide survey of rates.
Last week's performance had marked the eighth week in a row that rates on 30-year mortgages had gone up after hitting a low for the year of 5.38 percent the week of March 18.
"The rise in mortgage rates stalled this week primarily because of rising tensions in other parts of the world, causing foreign investors to flee to the security of U.S. Treasuries," said Freddie Mac chief economist Frank Nothaft. "Consequently, (bond) yields remained mainly unchanged from last week, and so did long-term mortgage rates."
Rates for 15-year fixed-rate mortgages also fell this week to 5.67 percent, from 5.72 percent last week. But rates for one-year adjustable-rate mortgages climbed to 3.99 percent, compared with 3.90 percent last week.
The nationwide averages for mortgage rates do not include add-on fees known as points. Thirty-year and 15-year loans each carried an average fee of 0.7 point this week, while one-year ARMs carried an average fee of 0.6 point.
This time last year, rates on 30-year mortgages averaged 5.34 percent, 15-year mortgages were 4.73 percent and one-year adjustable mortgages stood at 3.61 percent.
With the economy moving solidly ahead, economists predict mortgage rates will slowly rise in the coming months. According to some projections, rates on 30-year mortgages could reach 6.4 percent or 6.6 percent by the final quarter of this year.
Still, economists believe home sales this year will come in close to the record highs seen in 2003, when ultra-low mortgage rates beckoned to buyers.
