Mortgage rates at lowest level in six months

WASHINGTON — Rates on 30-year mortgages dipped this week to the lowest level in more than six months.

Mortgage giant Freddie Mac said Thursday that 30-year, fixed-rate mortgages fell to 6.31 percent this week, down from 6.40 percent last week.

The latest drop puts the 30-year mortgage at the lowest level since it stood at 6.24 percent in early March.

After hitting a four-year high of 6.80 percent on July 20, rates on 30-year mortgages have been trending down as financial markets became more convinced that a slowing economy will help keep inflation contained.

Such a slowdown would allow the Federal Reserve to keep interest rates on hold. Fed officials announced last week that they were leaving a key interest rate unchanged for the second straight month.

Sharp declines this year in home sales and construction of new homes have provided support for the view that the economy is slowing to a more sustainable pace and eased worries about inflation.

Many analysts believe interest rates will hover around current levels for the rest of the year. Such a development is expected to help the housing industry level off after sharp declines in recent months which have seen construction of new homes fall to the lowest levels in more than three years and both new and existing homes experience price drops when compared to sales prices a year ago.

Other types of mortgages showed declines this week as well.

Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing, averaged 5.98 percent, down from 6.06 percent last week.

For one-year adjustable-rate mortgages, rates dipped to 5.47 percent, down from 5.54 percent last week. Rates on five-year adjustable-rate mortgages fell to 6.00 percent this week, down from 6.08 percent last week.