30-year mortgage rates fall

Mortgage rates around the country fell this week, with rates on 30-year mortgages dipping to the second lowest level of the year, pushed down by further signs of economic weakness.

Mortgage giant Freddie Mac reported Thursday that 30-year, fixed-rate mortgages averaged 6.11 percent, down from 6.14 percent last week. The only time rates have been lower this year was the week of Jan. 19 when the 30-year mortgage dipped to 6.10 percent.

It marked the fourth straight weekly decline in rates, a development that economists attributed to easing inflation pressures as the overall economy slows, held back by a steep drop in housing construction and sales.

"Continued signs of slowing in the housing market and weakness in the manufacturing sector helped keep mortgage rates down this week," said Frank Nothaft, Freddie Mac's chief economist.

Nothaft said he believed that housing was about two-thirds of the way through a correction that began a year ago. He predicted that housing activity should stabilize by mid-2007, helped by lower mortgage rates.

Rates on 30-year mortgages have been steadily declining since they peaked at 6.80 percent in late July.

After five years in which sales of both new and existing homes climbed to successive highs, the housing market has cooled considerably this year. Sales have fallen and home builders have been scrambling to cut back on construction to deal with record levels of unsold homes.

The housing slump has been a major factor behind a significant slowdown in the economy this year, shaving 1.16 percentage points from overall growth in the summer, when the economy expanded at an annual rate of just 2.2 percent.

All categories of mortgage rates surveyed by Freddie Mac declined this week.

Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing, averaged 5.84 percent, down from 5.87 percent last week.

For one-year adjustable rate mortgages, rates fell to 5.43 percent, down from 5.46 percent last week.

Five-year adjustable rate mortgages dropped to 5.92 percent, compared to 5.95 percent last week.

The mortgage rates do not include add-on fees known as points. Thirty-year, 15-year and five-year mortgages each carried a nationwide average fee of 0.5 point. One-year mortgages carried a fee of 0.7 point.

A year ago, 30-year mortgages averaged 6.32 percent. Fifteen-year mortgages stood at 5.87 percent, one-year ARMs were at 5.16 percent and five-year ARMs averaged 5.78 percent.

___

On the Net:

Freddie Mac: http://www.freddiemac.com