Mortgage Rates Fall Due to Housing Market Concerns

U.S. mortgage rates fell in the past week as lenders showed heightened levels of concern for the effects a slowing housing market may have on the economy.

The 30-year fixed rate mortgage averaged 6.22 percent, down from 6.30 percent last week, according to Freddie Mac’s primary mortgage market survey, which the government-backed lending giant conducts weekly.

Last year at this time, 30-year mortgage rates averaged 6.26 percent.

“Mortgage rates eased a little more this week, as more market participants are concerned over how much negative impact a slowing housing market may have on economic growth,” said Frank Nothaft, Freddie Mac’s vice president and chief economist.

“Last week’s release of housing starts for January showed the weakest reading since August 1997, due to the abundance of homes already on the market to purchase.”

The 15-year mortgage rates, a popular home mortgage loan refinance option, averaged just 5.97 percent, down from 6.03 percent last week. A year ago, 15-year mortgage rates came in at an average of 5.89 percent.

As for 5-year adjustable-rate mortgages, they averaged 5.96 percent, down from 6.01 percent last week. Last year it was 5.32 percent.

The 1-year ARM, meanwhile averaged 5.49 percent, down from 5.52 percent last week. Last year at this time, it averaged 5.32 percent.

Nothaft said next week’s release of new and existing home sales should offer a more complete gauge of the housing industry’s strength.

“In addition, the second estimate of economic growth in the fourth quarter of 2006 will be released next week and should further provide insight into what extent the housing market is affecting the economy,” Nothaft said.

SOURCE: CNN Money