Posted on: Friday, February 4, 2005

30-year mortgage rates down for 5th week

By Martin Crutsinger
Associated Press

WASHINGTON — Rates on 30-year mortgages fell for a fifth straight week, but other shorter-term rates edged up a bit, influenced by the Federal Reserve's decision to again raise a key rate it controls.

Freddie Mac's weekly survey of mortgage rates, released yesterday, showed that rates on 30-year fixed-rate mortgages averaged 5.63 percent for the week ending Feb. 3, down from 5.66 percent last week.

Low mortgage rates powered sales of both new and existing homes to all-time highs in 2004, the fourth straight year that sales in both categories have set records.

Analysts are forecasting housing will enjoy another good year in 2005 with sales dipping by around 3 percent, a decline that would still give the country the second-highest levels for sales of new and existing homes.

"We continue to expect rates will not rise very much this year and that the economy will grow at a sustainable pace," said Frank Nothaft, chief economist for Freddie Mac.

Rates on 15-year fixed-rate mortgages remained unchanged at 5.14 percent. Rates on one-year adjustable-rate mortgages were 4.23 percent, up slightly from percent last week.

Nothaft said that the increase in one-year ARMs was influenced by the Fed's widely anticipated decision Wednesday to boost a key short-term interest rate for the sixth time since June.

"We will probably see the ARM rise a little more over the next few weeks in anticipation of further rate increases by the Fed while the long-term fixed rates remain fairly flat," Nothaft said.

The average for five-year hybrid adjustable rate mortgages was 5.00 percent this week, down from 5.02 percent last week.

The nationwide averages for mortgage rates do not include add-on fees known as points. The thirty-year, 15-year mortgages and one-year mortgages each carried a 0.7 point fee. The five-year ARM carried a fee of 0.6 point.

A year ago, rates on 30-year mortgages averaged 5.72 percent, with 15-year mortgages at 5.03 percent and one-year ARMs at 4.18 percent. There isn't a figure for five-year ARMs because Freddie Mac — the Federal Home Loan Mortgage Corp. — just began tracking those rates this year.