Posted on: Friday, January 14, 2005

Mortgage rates down a bit more

By Martin Crutsinger
Associated Press

WASHINGTON — Rates on 30-year mortgages fell for a second straight week, helping get the housing industry off to a good start in the new year.

Freddie Mac's weekly survey of mortgage rates released yesterday showed that rates on 30-year, fixed-rate mortgages averaged 5.74 percent for the week ending Jan. 13, down from 5.77 percent last week.

Low mortgage rates have powered home sales. Analysts believe sales for all of 2004 hit a record high and the housing market is expected to post another good year in 2005.

Amy Crews Cutts, the mortgage company's deputy chief economist, noted that 30-year mortgage rates averaged 5.84 percent for all of last year, a significant improvement over an average of 9.5 percent for the past 30 years.

"The onset of 2005 bodes well for the housing industry," she said.

She said rates are likely to end the year above 6 percent, reflecting in part the credit tightening campaign of the Federal Reserve, which is raising rates to keep inflation in check.

Some analysts believe rates on 30-year mortgages could climb to around 6.5 percent by the end of this year, which would still be considered low by historical standards.

Rates on 15-year, fixed-rate mortgages, a popular option for refinancing, dipped this week to 5.19 percent, down from 5.21 percent last week. For one-year adjustable-rate mortgages, rates remained unchanged at 4.10 percent.

Freddie Mac has added another type of mortgage to its weekly survey: a five-year, "hybrid" adjustable-rate mortgage. It's fixed for five years and then adjusts each year thereafter. The rate on that mortgage averaged 5.05 percent this week, up slightly from 5.03 percent last week.

The nationwide averages for mortgage rates this week do not include add-on fees known as points. The 30-year, 15-year and one-year adjustable mortgages each carried a 0.6 point fee. The five-year adjustable mortgage carried a 0.5 point fee.

A year ago, rates on 30-year mortgages averaged 5.66 percent, with 15-year mortgages at 4.97 percent and one-year ARMs at 3.62 percent. There isn't a figure for five-year adjustable mortgages because Freddie Mac just began tracking those rates this year.