November 21, 2008 in Business

Mortgage rates fall for third week on fears over weakening economy

Associated Press
 

WASHINGTON – Mortgage rates dropped for a third straight week, reflecting the impact the weakening economy is having on financial markets.

Freddie Mac, the mortgage finance giant, reported Thursday that rates on 30-year, fixed-rate mortgages averaged 6.04 percent this week, down from 6.14 percent last week. Rates hit a recent high of 6.46 percent during the week of Oct. 16.

Concerns about the economy and worries over the fate of Detroit’s three automakers have caused Wall Street’s major stock indexes to hit levels not seen since 2003, sending investors swiftly into government debt.

Bond yields, which move in the opposite direction from prices, have continued to fall in recent weeks, suggesting that even as bond returns diminish, investors prefer the relative security of government-backed debt.

Thirty-year mortgage rates hit a high for the year of 6.63 percent in late July and then dropped to a seven-month low of 5.78 percent for the week ending Sept. 18, shortly after the government took control of Freddie Mac and its sibling company, Fannie Mae.

Rates on other types of mortgages also fell this week. For 15-year, fixed-rate mortgages, rates dropped to 5.73 percent, from 5.81 percent last week.

Rates on five-year, adjustable-rate mortgages fell to 5.87 percent, from 5.98 percent last week. Rates on one-year, adjustable-rate mortgages edged down to 5.29 percent, from 5.33 percent last week.

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