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Oct. 5 - Rates On 30 Year Mortgages Fall
Information for Buyers
WASHINGTON – Oct. 5, 2007 – Rates on 30-year mortgages fell this week after two consecutive increases, providing a break for potential homebuyers and the beleaguered housing industry.
Freddie Mac, the mortgage company, reported Thursday that 30-year, fixed-rate mortgages averaged 6.37 percent this week, down from 6.42 percent last week. After hitting a high for this year of 6.73 percent in mid-July, rates have been trending lower as the worst slump in housing in 16 years has contributed to slower economic growth and fewer worries about inflation.
Two weeks ago, the nationwide average for 30-year mortgages dipped to 6.31 percent, the lowest level since May 17. That decline reflected in part a flight to the safety of Treasury securities in August after a bout of turbulence in credit markets.
The Federal Reserve announced two weeks ago that it was cutting a key interest rate by a more-than-expected half-point in an effort to make sure that the housing slump and the most severe credit crunch in almost a decade don’t push the economy into a recession.
In the 12 months ending in July, the housing sector lost 260,000 jobs, reflecting continued cutbacks in construction as builders scramble to trim record levels of unsold homes in the face of falling sales.
Rates on 15-year fixed-rate mortgages, a popular choice for refinancing, averaged 6.03 percent this week, down from 6.09 percent last week.
Rates on five-year adjustable rate mortgages averaged 6.11 percent, down from 6.15 percent last week. One-year ARMs averaged 5.58 percent, down from 5.60 percent.
The mortgage rates do not include add-on fees known as points. Thirty-year mortgages, 15-year and five-year mortgages all carried a nationwide average fee of 0.5 point while one-year adjustable-rate mortgages had an average fee of 0.6 point.
A year ago, 30-year mortgages stood at 6.30 percent, 15-year mortgages were at 5.98 percent, five-year ARMS averaged 6.00 percent and one-year ARMs were at 5.46 percent.
After a five-year boom, sales of both new and existing homes fell sharply last year. The slump has worsened this year as soaring foreclosure rates have caused lenders to tighten qualifications for getting a loan. While the delinquencies began in the market for subprime loans, which are offered to borrowers with weak credit histories, they have spread to other loan categories.
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