Rates for 30-year mortgages edge up slightly following 32-year low

Thursday, August 22nd 2002, 12:00 am
By: News On 6

WASHINGTON (AP) _ Rates for 30-year mortgages rose slightly this week after hitting a 32-year low last week, according to a nationwide survey released Thursday.

Freddie Mac, the mortgage company, reported that the average interest rate on a 30-year fixed-rate mortgage edged up to 6.27 percent, compared to 6.22 percent last week, which was the lowest rate in 32 years of record keeping.

Low mortgage rates are feeding a boom in mortgage refinancing. The Mortgage Bankers Association reported that mortgage applications hit a record level last week, according to a survey the organization does tracking mortgage applications for home purchases and refinancings.

``The current low rate environment should continue late into the year,'' predicted Doug Duncan, chief economist at the mortgage group.

Frank Nothaft, chief economist at Freddie Mac, said that even with the lowest mortgage rates in three decades, it appeared that home sales may be starting to slow from the breakneck pace of the past few months.

``The housing industry may finally be slowing to a still healthy, more normal pace,'' he said, noting that sales of existing homes in June and housing starts for July had moderated a bit.

``When figures for new and existing home sales for July are released next week, we will have a better picture of whether or not the housing market is actually easing a bit as summer comes to a close,'' Nothaft said.

According to the MBA survey, home refinancing accounted for 70.8 percent of activity last week, the first time that share has been above 70 percent since November.

The Freddie Mac mortgage survey showed that rates for 15-year fixed-rate mortgages also edged up slightly this week, climbing to 5.71 percent compared to 5.63 percent last week.

However, rates on one-year adjustable mortgages continued to decline, dropping to 4.34 percent this week, compared to 4.39 percent last week.

By comparison, rates on all three mortgage categories were higher this time a year ago. Rates for 30-year mortgages averaged 6.91 percent a year ago, while rates on 15-year mortgages were 6.47 percent and one-year adjustable rate mortgages were 5.68 percent.

These rates do not include add-on fees known as points. Thirty-year mortgages, 15-year mortgages and one-year ARMs all carried an average 0.7 point fee this week, according to the Freddie Mac survey.

Mortgage rates have been falling in recent weeks as economists have slashed their expectations for economic growth in the second half of this year because of concerns that the turmoil on Wall Street will trigger a new wave of job layoffs and cutbacks in consumer spending.