Freddie Mac: Expect Steady, Reasonable Mortgage Rates in 2007

For the week, mortgage rates fell slightly.

For the year, Freddie Mac doesn’t foresee much of a change in these long-term interest rates- and that’s great news for current owners, as well as potential borrowers.

In its weekly report, Freddie Mac says the average 30-year fixed-rate mortgage was 6.28 percent, down from 6.34 percent last week. One-year adjustable-rate mortgages were 5.49 percent, down from 5.54 percent last week.

“Throughout the year we expect rates on 30-year mortgages to average between 6.3 and 6.5 percent,” said Freddie Mac chief economist Frank Nothaft. “The flat or increasing rate environment will likely cause the [mortgage refinance] share to contract gradually. In addition, the dollar volume of home equity cashed-out will also retreat from the record level of $314 billion set in 2006 to around $230 billion this year.”

The housing industry is banking on steady mortgage interest rates to help bolster sales.

The housing slowdown continued through the final quarter of 2006. Luxury home builder Toll Bros. on Thursday reported a 33 percent drop in orders last quarter, mirroring reports in recent weeks from other home builders across the nation.

Low mortgage rates would encourage interested buyers to at least speak with a home loan lender and determine the right product for their needs.