Mortgage Rates Decline Slightly This Week

U.S. home mortgage loan rates fell a bit this week after rising sharply over the past two months, a Freddie Mac survey released Thursday shows.

The government-sponsored home loan buyer said the average mortgage rate on a 30-year fixed-rate home loan declined to 6.69 percent from 6.73 percent for the week ending July 26.

Last year at this time, 30-year mortgage rates were 6.72 percent.

“Mortgage rates eased this week on market concerns that a further weakening of housing demand this spring will delay any recovery in the sector,” said Frank Nothaft, Freddie Mac V.P. and chief economist, said in a statement.

“For example, home building permits fell last month to the slowest pace in a decade, and more recent data on June sales of existing home showed a fourth consecutive monthly decline.”

Several factors have contributed to the softening in the housing market.

In addition to the tightening of standards by lenders this year, especially on bad credit home loans, the 0.40 percent jump in fixed-rate, 30-year home mortgages - the standard home loan financing model - in June may have deterred many potential buyers.

For the year-to-date, as mortgage rates rose, sales of single-family homes were down about 9 percent from the first half of 2006.

In its latest report, the Freddie Mac said that rates on 15-year fixed-rate loans - a popular mortgage refinancing product - averaged 6.37 percent in the latest week, down from 6.38 percent last week.

A year ago, the 15-year mortgage rate averaged 6.34 percent.

Five-year adjustable-rate mortgages (ARMs) averaged 6.30 percent this week, down from 6.35 percent last week and also 6.35 percent a year ago.

One-year adjustable home mortgage loans averaged 5.69 percent this week, down from 6.72 percent last week. At this time last year, they averaged 5.78 percent.

SOURCE: CNN Money