Mortgage rates start year with decline

WASHINGTON — Mortgage rates around the country moved lower this week, marking a good start to a new year of home buying.

Freddie Mac’s weekly survey of mortgage rates released Thursday showed that rates on 30-year, fixed rate mortgages averaged 5.77 percent for the week ending Jan. 6. That was down from last week’s 5.81 percent.

For all of 2004, rates on benchmark 30-year mortgages averaged 5.84 percent, second only to last year’s 5.83 percent, the lowest annual rate in Freddie Mac’s record keeping.

Low mortgage rates have powered home sales. Analysts believe sales hit a record high for all of 2004. The housing market is expected to post another good year in 2005, analysts said.

Long-term mortgage rates have remained well-behaved even as the Federal Reserve has boosted short-term interest rates five times in 2004. That’s because inflation, while creeping higher, is not currently viewed as an immediate danger to the economy, analysts said.

Some analysts believe rates on 30-year mortgages could climb to around 6.5 percent by the end of this year, which would still be considered low by historical standards. A few think rates could hit 7 percent.

Rates on 15-year, fixed-rate mortgages, a popular option for refinancing, dipped this week to 5.21 percent, from 5.23 percent last week. For one-year adjustable-rate mortgages, rates fell to 4.10 percent this week, from 4.19 percent.