30-year mortgage rates stall after 8-week climb

updated 4:08 p.m. ET May 20, 2004

Rates on 30-year mortgages took a dip this week, breaking an eight-week climb.

Freddie Mac reported Thursday that rates on benchmark 30-year fixed-rate mortgages fell to 6.30 percent, down slightly from 6.34 percent last week, according to the mortgage giant's nationwide survey of rates.

Last week's performance had marked the eighth week in a row that rates on 30-year mortgages had gone up after hitting a low for the year of 5.38 percent the week of March 18.

"The rise in mortgage rates stalled this week primarily because of rising tensions in other parts of the world, causing foreign investors to flee to the security of U.S. Treasuries," said Freddie Mac chief economist Frank Nothaft. "Consequently, (bond) yields remained mainly unchanged from last week, and so did long-term mortgage rates."

Rates for 15-year fixed-rate mortgages also fell this week to 5.67 percent, down from 5.72 percent last week. But rates for one-year adjustable-rate mortgages climbed to 3.99 percent this week, compared with 3.90 percent last week.

The nationwide 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 0.7 point this week, while one-year ARMs carried an average fee of 0.6 point.

This time last year, rates on 30-year mortgages averaged 5.34 percent, 15-year mortgages were 4.73 percent and one-year adjustable mortgages stood at 3.61 percent.

With the economy moving solidly ahead, economists predict mortgage rates will slowly rise in the coming months. According to some projections, rates on 30-year mortgages could reach 6.4 percent or 6.6 percent by the final quarter of this year.

Still, economists believe home sales this year will come in close to the record highs seen in 2003, when ultra-low mortgage rates beckoned to buyers.

The recent rise in mortgage rates, however, is slowing refinancing activity. Refinancings accounted for 37.4 percent of total mortgage loan applications filed last week, down from 39.8 percent in the previous week, the Mortgage Bankers Association said.

MORE FROM PERSONAL FINANCE

Personal finance Section Front

Employers seek the power of older workers Economic crunch to take bite out of kids’ lunch Workers can expect skimpy raises in 2009 Retirement account rules a surprise to many 10 Tips: Financial advice for freshmen Answer Desk: Who cares about Fannie, Freddie? What retirement? Many find they have to work Young workers show poor commitment to save Study: Bankruptcies soar for senior citizens 10 Tips: Get the most from your bank Personal finance Section Front   Add Personal finance headlines to your news reader: