August 5, 2004

NEW YORK (CNN/Money) - Mortgage rates dropped this week as economic reports continued to indicate that the U.S. economic rebound hit a soft patch in June, mortgage finance firm Freddie Mac said Thursday in its latest report.

The rate on 30-year fixed-rate mortgages averaged 5.99 percent in the week ending August 5, with an average 0.7 point payable up front, down from 6.08 percent the previous week, Freddie Mac said.

A year earlier, the rate on the 30-year fixed-rate loan averaged 6.14 percent.

The 15-year mortgage rate fell to 5.40 percent from 5.49 percent, with 0.6 point payable up front. Last year, rates stood at 5.44 percent.

One-year adjustable rate mortgages (ARMs) averaged 4.08 percent, down from 4.17 percent the prior week, with 0.6 of a point payable up front. At this time last year, the average rate for ARMs was 3.68 percent.

"Additional economic indicators this week confirmed that June was a weak month for the nation as a whole," said Frank Nothaft, Freddie Mac's chief economist. "Consequently, the upward pressure on interest rates eased, allowing mortgage rates to return to earlier, lower levels."

Some of the weaker-than-expected figures from June include reports on consumer spending, retail sales and manufacturing. However, most economists see the month as an anomaly in what has been an otherwise broad U.S. economic recovery.

Freddie Mac's (FRE: up $0.29 to $64.91, Research, Estimates) average mortgage rates are based on a survey of 125 lenders nationwide.

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