Mortgage Rates Decline This Week
Rates on 30-year mortgages sank this week to their lowest point since late May, providing a ray of hope for prospective home buyers.
Freddie Mac, the mortgage company, reported Thursday that 30-year, fixed-rate mortgages averaged 6.52 percent, down from 6.62 percent last week and the lowest since the week ending May 31.
The 30-year mortgage rates then stood at 6.42 percent.
The decline provides a dose of welcome news for prospective home buyers, some of whom also may be facing a situation of tight credit.
In mid-June, rates on 30-year mortgages climbed to 6.74 percent, the high for this year so far.
Other mortgage rates also went down this week.
Rates for 15-year fixed-rate home loans, a popular choice for mortgage refinancing, averaged 6.18 percent, down from 6.30 percent.
For five-year adjustable-rate home loans, average rates dipped to 6.34 percent, from 6.35 percent last week. Rates on one-year adjustable-rate mortgages fell to 5.60 percent, compared with 5.67 percent.
U.S. home mortgage loan rates eased following last week’s decision by the Federal Reserve to slice its lending rate to banks, a move designed to calm recent turmoil on Wall Street about a spreading credit crunch.
“Interest rates on conforming long-term fixed rate mortgages and one-year adjustable-rate mortgages trended down by about one-tenth of a percent in the past week,” said Frank Nothaft, Freddie Mac’s chief economist.
“This is as a result of yields on Treasury securities coming down, and the Fed’s decision to cut the discount rate,” he explained.
The home mortgage rates quoted here do not include points.
Last week, 30-year home mortgage products carried a national average of 0.4 points, while 15-year mortgages had a fee of 0.5 points. Five-year and one-year ARMs each carried an average of 0.6 points.
A year ago, rates on 30-year home mortgage loans stood at 6.48 percent, with 15-year mortgages at 6.18 percent, five-year ARMS averaged 6.14 percent and one-year ARMs were at 5.60 percent.
After a five-year boom, the U.S. housing market went bust last year. Sales turned weak as did home prices. The slump has gotten worse this year as lenders have made it more difficult for some people to obtain loans.
Many mortgage lenders have tightened standards amid soaring foreclosures and late payments by subprime (bad credit home loan) borrowers. Problems have spread, affecting credit worthy borrowers, too.
Against this backdrop, Wall Street investors have been gripped by fears that the credit crisis will turn into an economic crisis.
SOURCE: Forbes