Posted on: Friday, April 29, 2005

30-year rates fall 4th week in row

By Martin Crutsinger
Associated Press

WASHINGTON — Rates on 30-year mortgages fell for a fourth consecutive week as more evidence of an economic slowdown eased concerns among bond investors about inflation.

Mortgage giant Freddie Mac reported yesterday in its weekly survey that rates on 30-year, fixed-rate mortgages averaged 5.78 percent this week, down from 5.80 percent last week.

It was the fourth straight decline and pushed the 30-year rate to its lowest level since late February.

Analysts attributed this week's drop to more weaker-than-expected economic reports that soothed worries among bond traders that the economy might be growing at such a rapid clip that the Federal Reserve would start raising interest rates more aggressively to ward off inflation.

Analysts believe that mortgage rates will resume rising in the months ahead but at a gradual pace that would leave the 30-year mortgage at around 6.5 percent by the end of the year.

Other mortgage rates declined as well this week. Rates on 15-year, fixed-rate mortgages, a popular option for refinancing, fell to 5.33 percent, down from 5.36 percent last week.

Rates on one-year adjustable-rate mortgages dropped to 4.21 percent, down from 4.26 percent last week.

Five-year hybrid adjustable rate mortgages averaged 5.20 percent this week, down from 5.22 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 five-year ARM carried a fee of 0.5 point while the three other categories all carried a fee of 0.6 point.

A year ago, 30-year mortgages averaged 6.01 percent, 15-year mortgages were at 5.35 percent and one-year ARMs averaged 3.75 percent.