Rates on 30-year mortgages see slight decline again

WASHINGTON – Rates on 30-year mortgages dipped for a second week as financial markets responded to signals of lower inflation.

Mortgage giant Freddie Mac reported Thursday that rates on 30-year, fixed-rate mortgages averaged 6.26 percent this week, down slightly from 6.30 percent last week.

Rates on 30-year mortgages had hit a two-year high of 6.37 on Nov. 17 but have declined in four of the past five weeks.

Economists said the trend is still for rates to move higher as the Federal Reserve keeps pushing interest rates up to make sure that surging energy prices do not trigger more widespread inflation problems.

Many analysts believe the Fed will raise rates for a 14th time at Alan Greenspan’s last meeting on Jan. 31 and then once more on March 28.

Rates on 30-year and 15-year mortgages dipped this week, reflecting reports of big declines in both consumer and wholesale prices for November. Rates on one-year and five-year adjustable rate mortgages went up, responding to signals from the Fed that more rate hikes could be expected, analysts said.

“Although mortgage rates by and large are higher than they were at the start of the year, they’ve only risen about 1 percentage point since hitting a four-decade low in June of 2004,” said Frank Nothaft, chief economist at Freddie Mac.