This year is on pace to be the second-best ever for home sales.
WASHINGTON (AP) – Rates on 30-year mortgages dropped to a record low this week, the sixth time that has happened this year.
The average interest rate on a fixed-rate 30-year mortgage fell to 5.45 percent, down from 5.62 percent the week before, Freddie Mac, the mortgage company, reported Thursday in its weekly nationwide survey.
This week’s rate surpassed the previous low of 5.61 percent, set the week ending March 14. The new rate is the lowest since Freddie Mac began tracking 30-year mortgages in 1971. Records that reach back earlier indicate that the rate is the lowest in more than four decades, economists said.
Low mortgage rates propelled home sales to record levels last year. This year is shaping up to be the second-best on record for sales of existing homes and new ones, economists say.
The housing market is one of the few bright spots of the lackluster economy.
For 15-year fixed-rate mortgages, a popular option for refinancing, rates declined to 4.84 percent this week, compared with last week’s 4.97 percent rate.
Rates for one-year adjustable mortgages, however, nudged up to 3.67 percent, from 3.66 percent last week.
Low mortgage rates also pushed home-mortgage refinancing activity to a record level last year, something that has played a key role in supporting consumer spending. Consumers, the main force keeping the economy going, used the money saved on their monthly mortgage payments to make other purchases.
The Mortgage Bankers Association of America said that applications for mortgages jumped last week as mortgage rates dipped.
Refinancing activity accounted for 72.4 percent of all mortgage applications filed last week, up from 68.7 percent the week before, the association said.
“Strong purchase and refinance indexes reflect consumers responding to those low (mortgage) rates,” said Phil Colling, an economist with the association.
This week’s mortgage rates do not include add-on fees known as points. For 30-year mortgages and one-year adjustable mortgages, each loan type carried an average fee of 0.6 point this week. Fifteen-year mortgages carried an average fee of 0.7 point.
A year ago, rates on 30-year mortgages averaged 6.89 percent, 15-year mortgages were 6.37 percent and one-year adjustable mortgages stood at 4.81 percent.
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On the Net:
Freddie Mac: http://www.freddiemac.com
AP-ES-05-15-03 1706EDT
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