By Amy Hoak
Mortgage rates fell this week, as the economy continued to show
signs of slowing, Freddie Mac's chief economist said Thursday.
Thirty-year fixed-rate mortgages averaged 5.04% for the week
ending Feb. 19, according to Freddie Mac's (FRE) latest weekly
survey of conforming loan rates. That's down from last week's 5.16%
average and last year's 6.04% average.
The 15-year fixed-rate mortgage also fell, averaging 4.68% this
week, down from 4.81% last week. The mortgage averaged 5.64% a year
ago.
Five-year Treasury-indexed hybrid adjustable-rate mortgages
averaged 5.04% this week, down from 5.23% last week and 5.37% a
year ago. And 1-year Treasury-indexed ARMs averaged 4.80%, down
from 4.94% last week and 4.98% a year ago.
To obtain the rates, the 30-year fixed-rate mortgage required
payment of an average 0.7 point, the 15-year fixed-rate and the
5-year ARM required an average 0.6 point and the 1-year ARM
required an average 0.5 point. A point is 1% of the mortgage
amount, charged as prepaid interest.
"Mortgage rates followed bond yields lower this week as recent
economic reports suggest the economy is still slowing, which
reduces the future threat of inflation," said Frank Nothaft,
Freddie Mac chief economist, in a news release.
Consumer sentiment fell in February for the first time in three
months and industrial production slowed in January by more than the
market expected, he said.
"In addition, the Federal Reserve lowered its growth forecasts
for this year during its policy-setting meeting on Jan. 27-28,
noting a deeper contraction in the economy as the credit crunch
tightens," Nothaft said.
"New housing construction slowed to an all-time record low of
466,000 homes (annualized) in January since records began in
January 1959.
"And although homebuilder confidence ticked up in February from
a record low, builder expectations of sales over the next six
months hit a record low since it was first published in January
1985."
Low mortgage rates, however, are prompting more interest in
refinancing. Refinance applications jumped 64.3% last week,
compared with the week before, according to the Mortgage Bankers
Association.
-By Amy Hoak, 415-439-6400; AskNewswires@dowjones.com