Mortgage rates decline

Thursday, May 1st 2003, 12:00 am
By: News On 6

WASHINGTON (AP) _ Mortgage rates moved lower this week, good news for people thinking about buying a home.

The average interest rate on a fixed-rate 30-year mortgage fell to 5.70 percent, Freddie Mac, the mortgage company, reported Thursday in its weekly nationwide survey. This week's rate was down from 5.79 percent last week.

In the week ending March 14, right before the United States went to war against Iraq, rates on 30-year mortgages declined to a record low of 5.61 percent as jittery investors sought the safe havens of bonds.

That rate was the lowest since Freddie Mac began tracking 30-year mortgages in 1971. Records that reach back earlier indicate that the rate is the lowest since the early 1960s.

Low mortgage rates propelled home sales to record levels last year, and economists expect this year could turn out to be very good given the favorable financing climate.

``It appears the housing industry will continue to flourish well into the summer,'' said Frank Nothaft, Freddie Mac's chief economist.

For 15-year fixed-rate mortgages, a popular option for refinancing, rates declined to 5.03 percent this week, compared with last week's 5.12 percent rate.

Rates for one-year adjustable mortgages dipped to 3.74 percent, down from 3.79 percent last week.

Low mortgage rates also propelled home-mortgage refinancing activity to a record level last year, which has played a key role in supporting consumer spending. Consumers, the main force keeping the economy going, used the money saved on their monthly mortgage payments to make other purchases.

``Mortgage rates have fallen enough over the last few months that families who refinanced in 2001 are now able to do so again,'' Nothaft said.

This week's mortgage rates do not include add-on fees known as points. Each loan type carried an average fee of 0.6 point this week.

A year ago, rates on 30-year mortgages averaged 6.78 percent, 15-year mortgages were 6.26 percent and one-year adjustable mortgages stood at 4.75 percent.