Mortgage Rates Decline For Second Consecutive Week

Mortgage rates slipped for the second week in a row due to indications of a slowing economy and lower inflation, the chief economist for mortgage giant Freddie Mac said on Thursday.

According to Freddie Mac’s weekly survey of the nation’s mortgage lenders, the 30-year fixed-rate home loan averaged 6.18 percent for the week ending March 1, down from last week’s 6.22 percent average.

The 30-year, fixed-rate mortgage - America’s most common home loan and the industry’s benchmark financing product - averaged just 6.24 percent a year ago.

A popular choice for mortgage refinancing, the 15-year fixed-rate mortgage, averaged 5.92 percent, down from 5.97 percent seven days ago. The mortgage averaged almost the same - 5.89 percent - a year ago.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.93 percent, down from last week’s 5.96 percent average. The ARM averaged 5.97 percent a year ago. One-year Treasury-indexed ARMs came in at 5.49 percent, unchanged from last week.

This ARM averaged 5.34 percent a year ago.

To obtain the mortgage rates quoted above, the 30-year fixed-rate mortgage required payment of an average 0.4 points, while the 15-year fixed-rate required up-front payment of an average 0.5 points.

Both 5-year and the 1-year ARMs required payment of 0.6 points on average. A point is 1 percent of the mortgage amount, charged as prepaid interest.

“We’re seeing mortgage rates drifted lower largely on the basis of new economic data suggesting a slower economy and lower inflation,” said Frank Nothaft, Freddie Mac vice president and chief economist, in a news release.

“Real GDP growth for the last quarter was revised downward to a 2.2 percent annualized rate, compared to the 3.5 percent initially estimated, while the accompanying price measure showed that core inflation was tamer than first reported, at a revised 1.9 percent annualized rate.”

A reported January home price decrease and an unexpected rise of existing home sales for the month painted a mixed picture of the housing market, he said.

“While the overall trend is unclear, the U.S. housing market is likely to continue on its rocky path during the first half of 2007,” Nothaft added.

According to a separate survey released by the Mortgage Bankers Association on Wednesday, mortgage application volume increased by a seasonally adjusted 3.2 percent for the week ending Feb. 23. Volume was up 8.8 percent compared with the same week in 2006.

SOURCE: MarketWatch