07.08.2004
Associated Press

Rates on 30-year and 15-year mortgages dropped for a third straight week to levels that homebuyers haven't been able to take advantage of since the spring.

Freddie Mac said Thursday in its weekly nationwide survey that rates on benchmark 30-year, fixed-rate mortgages fell to 6.01 percent this week, down from 6.21 percent last week. It was the lowest level since mid-April.

Thirty-year rates hit a low this year of 5.38 percent the week ending March 18.

"This is good news for those who are still house-hunting, as lower rates mean more affordable housing," said Frank Nothaft, Freddie Mac's chief economist.

Rates for 15-year, fixed-rate mortgages dropped to 5.42 percent this week, down from 5.62 percent last week. It was the lowest level since the end of April.

Rates on one-year adjustable rate mortgages also were down, falling to 4.05 percent from 4.19 percent the previous week.

A year ago, rates on 30-year mortgages averaged 5.4 percent, with 15-year mortgages at 4.75 percent and one-year ARMs stood at 3.49 percent.

"Home construction remains strong and home sales continue to break records easily," Nothaft said. He expects total home sales to end the year about 2 percent higher than last year's record level.

Mortgage rates had been steadily rising, reflecting a brightening economy and the anticipation of the first interest rate hike in four years by the Federal Reserve, which acted last week.

Contributing to this week's drop in mortgage rates was a weak employment report, released last week by the Labor Department, showing job growth had slowed in June, economists said.

"Long-term mortgage rates this week fell to levels equal to those experienced in April, reacting in large part to last Friday's news of less-than-stellar job growth in June," Nothaft said.

The nationwide averages for mortgage rates do not include add-on fees known as points. All loans carried an average fee of 0.6 point this week.

In a separate report, the Mortgage Bankers Association said refinancings accounted for 35.8 percent of total mortgage loan applications filed last week, up from 33.4 percent the previous week.

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