Mortgage rates drift lower again

WASHINGTON — Mortgage rates declined again this week with 30-year mortgages remaining below the 6 percent level for a third consecutive week, Freddie Mac reported Thursday.

The mortgage giant said that its latest nationwide survey showed that rates on 30-year, fixed-rates mortgages fell to 5.81 percent this week. That’s down from the average rate of 5.85 percent last week and is the lowest level for 30-year mortgages in more than four months, since they averaged 5.79 percent the week of April 8.

Rates on 30-year mortgages hit a high this year of 6.34 percent the week of May 13. Since then, they have slowly drifted downward, reflecting a significant slowdown in economic activity in the late spring and early summer.

Analysts said the weakness in growth was easing investors’ fears that inflation will suddenly worsen and make their bond holdings worth less.

“Mortgage rates eased even further this week in response to a setback in economic growth during June and possibly July,” said Frank Nothaft, chief economist at Freddie Mac. “However, we believe the slowdown to be temporary and we expect growth to pick up in the second half of this year.”

Nothaft said the low rates were helping to keep sales of new and existing homes at record levels and he predicted “2004 will be another banner year for the housing industry.”

The new Freddie Mac survey showed that rates on 15-year, fixed-rate mortgages, a popular option for refinancing, also declined this week to 5.19 percent, down from 5.24 percent last week. For one-year adjustable rate mortgages, rates dipped to 4.01 percent, down from 4.08 percent last week.

The nationwide averages for mortgage rates do not include add-on fees known as points. The 30-year mortgage carried an average 0.7 point fee this week while the 15-year and 1-year mortgages both carried 0.6 point fee.

A year ago, rates on 30-year mortgages averaged 6.24 percent with 15-year mortgages at 5.58 percent and one-year ARMs at 3.75 percent.