Posted on: Friday, June 24, 2005

30-year mortgage rates fall 10th time in 12 weeks

By Martin Crutsinger
Associated Press

WASHINGTON — Rates on 30-year mortgages resumed their decline this week, falling for the 10th time in the past 12 weeks.

Mortgage giant Freddie Mac said yesterday its weekly survey showed that rates on 30-year, fixed-rate mortgages averaged 5.57 percent, down from 5.63 percent last week. It was the second-lowest level recorded this year.

The decline in mortgage rates over the past two months has helped push sales of both new and existing homes to record levels this year. The National Association of Realtors reported yesterday that sales of previously owned homes declined a tiny 0.7 percent in May after hitting an all-time high in April. However, the May sales pace of 7.13 million units at a seasonally adjusted annual rate was the second-highest level on record.

"The housing market still has a good head of steam," said Frank Nothaft, chief economist at Freddie Mac.

"Given that mortgage rates aren't expected to move too much in either direction any time soon, we fully expect the housing market will continue to thrive well into the foreseeable future," Nothaft said.

Despite the fact that the Federal Reserve has been raising short-term interest rates for a year, long-term rates, including mortgage rates, have been falling for much of this year, providing support for housing construction and sales.

For 15-year, fixed-rate mortgages, rates fell to 5.16 percent, down from 5.22 percent last week.

Rates on one-year adjustable rate mortgages fell to 4.23 percent, down from 4.25 percent last week. For five-year hybrid adjustable rate mortgages, rates fell to 5.05 percent, down from 5.10 percent last week.

The nationwide averages for mortgage rates do not include add-on fees known as points. The one-year ARM had an average fee of 0.7 point and the other three mortgage categories carried fees of 0.6 point.

A year ago, 30-year mortgages averaged 6.25 percent, 15-year mortgages were at 5.64 percent and one-year ARMs averaged 4.13 percent.