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Friday, Sep. 11, 1998
Mortgage rates hit lowest point in 5 years at 6.77%
Freddie Mac says rates could dip even lower next week
Associated Press
WASHINGTON - Mortgage rates fell to a five-year low this week, nearing a level not seen since the late 1960s.
The average interest rate on 30-year, fixed-rate mortgages dropped to 6.77 percent from 6.82 percent, Freddie Mac, the mortgage company, said Thursday.
That's the lowest since 6.74 percent in late October 1993 and nearly half a percentage point lower than the high for the year, 7.22 percent, reached in late April.
If the average falls below 6.74 percent next week, it will reach a 30-year low. Economist Robert Van Order of Freddie Mac said there's a good chance that will occur.
``Not only have mortgage rates fallen to historical lows, they have remained at such levels for a record-breaking 13 weeks,'' Van Order said. ``The real news, however, is that they may very well average out even lower next week.''
Economist Mark Zandi of Regional Financial Associated in West Chester, Pa., said 30-year mortgage rates could soon be down to around 6.5 percent.
The drop in mortgage rates is a byproduct of international financial turmoil. Because of the relative strength of the U.S. economy, foreigners have been snapping up dollar-denominated assets, particularly government-guaranteed U.S. Treasury securities. And mortgage rates tend to move up and down with Treasury rates.
The drop has benefited home buyers, who have driven sales of both new and used homes to records highs this summer, and the many home owners who are refinancing their mortgages to get lower payments.
Reducing the rate on a 30-year, $100,000 mortgage by a half percentage point would save the borrower nearly $400 a year.
``We're on the verge of another unprecedented surge in refinancing,'' Zandi said. ``That will go a long way to reducing household debt burdens and putting more cash into household pocketbooks.''
According to the Mortgage Bankers Association of America, mortgage loan applications last week were up 162 percent from the same time a year earlier. Refinancings represented 52 percent of last week's total.
Meanwhile, Freddie Mac said 15-year mortgages, a popular option for refinancing, averaged 6.43 percent, a decrease from 6.51 the previous week and also the lowest since October 1993.
On one-year, adjustable-rate mortgages, lenders were asking an average initial rate of 5.50 percent, down from 5.51 percent and the lowest in eight months.
The rates do not include add-on fees known as points.Post your comments about local news eventsFront Page || Main Index || News || Business || Texas || South Texas Outdoors || Birdwatching || Sports || Entertainment || Selena || Education || South Texas Attractions || World Wide Web