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Interest rates fall on long-term mortgages

Associated Press

WASHINGTON — Interest rates on 30-year and 15-year mortgages fell for the second week in a row, offering encouraging news for people in the market to buy a home.

The mortgage company Freddie Mac, in its weekly nationwide survey, reported Thursday that rates on benchmark 30-year fixed-rate mortgages declined this week to 6.21 percent, compared with 6.25 percent last week. Thirty-year mortgage rates hit a low this year of 5.38 percent in the week ending March 18.

Rates for 15-year, fixed-rate mortgages dipped this week to 5.62 percent, down from 5.64 percent last week.

Rates on one-year adjustable rate mortgages this week rose to 4.19 percent from 4.13 percent.

A year ago, rates on 30-year mortgage averaged 5.24 percent, 15-year mortgages were at 4.63 percent and rates on one-year ARMs stood at 3.45 percent.

The Federal Reserve on Wednesday decided to raise a short-term interest rate to 1.25 percent from 1 percent, the lowest rate in 46 years. The increase was the first in four years.

Although the Fed’s action indirectly can influence rates on 30-year and 15-year mortgages, it has a direct impact on short-term one-year ARMs.

“As expected, long-term mortgage rates were relatively unaffected by the Fed’s recent action,” said Frank Nothaft, Freddie Mac’s chief economist. Short-term rates, as expected, moved higher in response to the central bank’s decision, he added.

“Although we anticipate a moderation in the housing sector at some future point, with the economy picking up steam and mortgage rates still low by historical standards, the housing market will remain buoyant for at least the rest of the year,” he added.

The averages for mortgage rates do not include add-on fees known as points.

Thirty-year and 15-year loans each carried an average fee of 0.6 point this week, while one-year ARMs carried an average fee of 0.7 point.

In a separate report, refinancings accounted for 33.4 percent of total mortgage loan applications filed last week, unchanged from the previous week, the Mortgage Bankers Association said.