Posted on: Friday, April 22, 2005
Oil-price spike drops mortgage rates
By Martin Crutsinger
Associated Press
WASHINGTON — Rates on 30-year mortgages fell for a third consecutive week as bond investors focused on a number of economic reports signaling a slowing economy.
Mortgage giant Freddie Mac reported yesterday in its weekly survey that rates on 30-year, fixed-rate mortgages averaged 5.80 percent this week, down from 5.91 percent last week.
It was the third straight decline since rates at the end of March hit 6.04 percent, the highest they had been since last July. The 30-year mortgage now stands at its lowest level since early March.
Analysts attributed this week's decline to economic reports that raised concerns that this year's spike in oil prices could be pushing the economy into another "soft patch" that would be a repeat of last year's period of weakness.
"Interest rates in general have been oscillating with every piece of economic news released lately," said Frank Nothaft, Freddie Mac's chief economist. "The market is switching its focus between the strength of the economy and the fear of inflation."
Nothaft said that the string of rate declines in recent weeks was not signaling a new downward trend. He has been predicting that 30-year mortgage rates will resume rising at a gradual pace and will end the year around 6.5 percent.
Rates on 15-year, fixed-rate mortgages, a popular option for refinancing, fell to 5.36 percent this week, down from 5.46 percent last week.
Rates on one-year adjustable-rate mortgages dropped to 4.26 percent, down from 4.30 percent last week.
Five-year hybrid adjustable rate mortgages averaged 5.22 percent this week, down from 5.31 percent last week. These hybrid mortgages have a fixed rate for five years and then adjust each year after that.
The nationwide averages for mortgage rates do not include add-on fees known as points. The 30-year mortgage and the 15-year ARM carried a fee of 0.5 point on average while the five-year and the one-year ARM carried a 0.6 point fee.
