30-, 15-Yr Mortgages Lowest Since April

Thu Sep 23, 2004

WASHINGTON (Reuters) - Interest rates on U.S. 30- and 15-year mortgages fell this week to their lowest levels since early April as the housing market showed little sign of slowing despite the Federal Reserve's move to raise interest rates, mortgage finance company Freddie Mac said on Thursday.

U.S. 30-year mortgage rates fell to an average of 5.70 percent in the week to Sept. 23, down from 5.75 percent a week earlier. It marked the lowest level for 30-year mortgage rates since they averaged 5.52 percent on April 1, 2004.

Freddie Mac said 15-year mortgages also fell to their lowest mark in nearly six months as they averaged 5.10 percent, compared with 5.13 percent last week. Fifteen-year mortgages averaged 4.84 percent in the April 1 week, the last time they were lower.

One-year adjustable rate mortgages stood at an average of 4.00 percent, down slightly from 4.03 percent a week ago.

A year ago, 30-year mortgage rates averaged 6.01 percent, 15-year mortgages 5.30 percent and the ARM 3.81 percent.

"Our Primary Mortgage Market Survey results this week show mortgage rates slipping again, which will all but guarantee that the housing industry will continue at its robust pace and set yet again, another record for both new construction and overall home sales," Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement.

The U.S. Federal Reserve on Tuesday raised interest rates for the third time this year by a quarter of a percentage point and said the economy was regaining momentum, signaling at least one more increase to come.

The decision by the policy-setting Federal Open Market Committee moved the benchmark federal funds rate -- which influences credit costs throughout the economy -- to 1.75 percent from 1.50 percent.

Low mortgage rates have encouraged housing construction, with U.S. housing starts rising 0.6 percent in August to their highest level in five months, a government report showed on Tuesday.

Housing starts climbed to a seasonally adjusted annual rate of 2.000 million units from an upwardly revised 1.988 million in July, the Commerce Department said.

Freddie Mac said lenders charged an average of 0.7 percent in fees and points on 30-year and 15-year mortgages, both down from 0.8 percent a week ago. The ARM was unchanged from a week ago at 0.7 percent.

Freddie Mac is a mortgage finance company chartered by Congress that buys mortgages from lenders and packages them into securities for investors or holds them in its own portfolio.




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