WASHINGTON (AP) – Mortgage rates around the country fell this week, after climbing for two weeks in a row, reflecting gyrations in financial markets over the war in Iraq.
The average interest rate on a fixed-rate 30-year mortgage dropped to 5.79 percent, from 5.91 percent last week, Freddie Mac, the mortgage company, reported Thursday in its weekly nationwide survey.
In the middle of March, rates on 30-year mortgages declined to a record low rate of 5.61 percent. That rate was the lowest since Freddie Mac began tracking 30-year mortgages in 1971. Records that reach back earlier than Freddie Mac’s indicate that the rate is the lowest since the early 1960s.
This week’s decline in mortgage rates was influenced by recent worries in financial markets that the war in Iraq might be prolonged, economists said. That caused investors to shift money from stocks into the safe haven of bonds, making bond prices rise and interest rates on bonds fall. However, financial markets have been gyrating for some time between hopes of a quick victory and fears of a prolonged war.
“I think it’s safe to say that financial markets will continue to experience volatility, at least until there is some resolution to the current situation in Iraq,” said Frank Nothaft, Freddie Mac’s chief economist.
For 15-year fixed-rate mortgages, a popular option for refinancing, rates went down to 5.06 percent this week, compared with 5.21 percent last week.
On one-year adjustable rate mortgages, rates edged down to 3.82 percent, from 3.84 percent registered in the previous week.
Low mortgage rates propelled home sales and home-mortgage refinancing activity to record levels last year. As consumers swap higher-interest rate home loans for lower-interest rate ones, the extra cash has helped to support consumer spending. So have rising home values.
But Federal Reserve Chairman Alan Greenspan expects the refinancing market to slow this year and home values to cool.
The Mortgage Bankers Association of America reported that refinancing accounted for 73.3 percent of all home mortgage applications filed last week, down from 76.5 percent the week before.
This week’s mortgage rates do not include add-on fees known as points. Each loan type carried an average fee of 0.6 point this week.
A year ago, rates on 30-year mortgages averaged 7.13 percent, 15-year mortgages were 6.64 percent and one-year adjustable mortgages stood at 4.99 percent.
—
On the Net:
Freddie Mac: http://www.freddiemac.com
AP-ES-04-03-03 1402EST
Send questions/comments to the editors.
