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Rate Updates
Rates on 30-year mortgages dip below 6 percent
May 22, 11:39 AM EDT
WASHINGTON (AP)
-- Rates on 30-year mortgages dipped below 6 percent this week,
falling to their lowest level in five weeks.
Freddie Mac, the
mortgage company, reported Thursday that 30-year fixed-rate
mortgages averaged 5.98 percent this week. That was down from
6.01 percent last week.
It was the
lowest level for 30-year mortgages since they averaged 5.88 percent
the week of April 17. After that, 30-year rates climbed above 6
percent for four straight weeks.
Rates on
15-year fixed-rate mortgages also fell, dropping to 5.55 percent,
down from 5.60 percent last week. However, rates on one-year and
five-year adjustable rate mortgages rose for the week.
The five-year
adjustable-rate mortgage edged up to 5.61 percent from 5.57 percent
last week. The rate on one-year ARMs rose to 5.24 percent, up
from 5.18 percent last week.
Analysts said
financial markets pushed longer-term rates down in response to
economic reports showing continued weakness in the economy. However,
rates on adjustable rate mortgages rose because they are more
sensitive to what the Federal Reserve intends to do with the
short-term rates it controls.
Financial
markets are growing more convinced that the Fed has now moved
to the sidelines and will not cut rates further out of concern
about inflation pressures. The Fed aggressively cut rates seven
straight times starting last September, with the last reduction
occurring in April. But minutes of that meeting released Wednesday
showed Fed officials viewed that April 30 quarter-point cut as a
"close call."
The Fed is
balancing the risks of a weak economy this is flirting with a
recession against rising inflation pressures. Many analysts
believe the Fed will remain on hold for the rest of this year and
its next move will be to start raising interest rates, but probably
not until the middle of next year.
While mortgage
rates remain at attractive levels for home buying, the home market
is facing numerous other headwinds from slumping prices, which are
keeping potential buyers on the fence, to rising mortgage defaults
which are dumping more homes on an already glutted market. In
addition, many banks have raised their lending standards in
response to the surge in mortgage defaults.
The mortgage
rates do not include add-on fees known as points. The nationwide
average fee for 30-year fixed-rate mortgages was 0.5 point. The
other mortgage categories surveyed by Freddie Mac all carried a 0.6
point average fee.
A year ago,
rates on 30-year mortgages stood at 6.37 percent, 15-year mortgage
rates averaged 6.06 percent, five-year adjustable-rate mortgages
were at 6.02 percent and one-year adjustable-rate mortgages were at
5.64 percent.
Source: ap.org
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