Long-term mortgage rates edge up

Thursday, April 10th 2003, 12:00 am
By: News On 6

WASHINGTON (AP) _ Rates on long-term mortgages edged up this week as the economy showed signs it is still working through a rough patch, economists said.

The average interest rate on a fixed-rate 30-year mortgage rose to 5.85 percent for the week ending April 11, the mortgage company Freddie Mac reported Thursday in its weekly nationwide survey. This week's rate was up from the rate of 5.79 percent a week ago.

In the middle of March, rates on 30-year mortgages declined to a record 5.61 percent, the lowest since Freddie Mac began tracking 30-year mortgages in 1971. Records that go back even further than Freddie Mac's indicate that the rate is the lowest since the early 1960s.

``With the conflict in Iraq seemingly under control, the financial markets have shifted focus back on the economy. And, what the markets discovered is that we seem to be in another soft spot,'' said Frank Nothaft, Freddie Mac's chief economist.

For 15-year fixed-rate mortgages, a popular option for refinancing, rates crept up to 5.17 percent this week, compared with 5.06 percent last week.

Even with the increases, rates for 30-year and 15-year mortgages are still sufficiently low to support the housing market, economists said.

``Mortgage rates continue to hover near 40-year lows, which ... should set the stage for a robust spring buying season,'' Nothaft said.

For one-year adjustable mortgages, rates were 3.80 percent, compared with 3.82 percent in the previous week.

Low mortgage rates sent home sales and home-mortgage refinancing activity to records levels last year. As consumers swap higher-interest rate home loans for lower-interest rate ones, the extra cash has helped to support consumer spending. So have rising home values.

But Federal Reserve Chairman Alan Greenspan expects the refinancing market to slow this year and home values to cool.

The Mortgage Bankers Association of America reported that refinancing accounted for 70.3 percent of all home mortgage applications filed last week, down from 73.3 percent the week before.

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 6.99 percent, 15-year mortgages were 6.49 percent and one-year adjustable mortgages stood at 5.00 percent.