August 8, 2004
BY JEANNINE AVERSA
ASSOCIATED PRESS

Rates on 30-year mortgages dipped below the 6-percent level last week, good news for people wanting to buy a home.

Freddie Mac, in its weekly nationwide survey, said that the average interest rate on 30-year, fixed-rates mortgages fell to 5.99 percent for the week ending Aug. 5.

That's down from the average rate of 6.08 percent the week before.

The last time rates on benchmark 30-year mortgages were below the 6-percent mark was the week ending July 22.

Rates on 30-year mortgages hit a high of 6.34 percent the week of May 13.

Since then, they have slowly drifted downward, reflecting in part a cooling in economic activity in June.

Additional economic indicators confirmed "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 mortgages to return to earlier, lower levels."

Federal Reserve Chairman Alan Greenspan, appearing before Congress last month, called the economic slowdown in June a "soft patch." However, he expressed confidence the economy will pick up speed in the months ahead.

Rates on 15-year, fixed-rate mortgages, a popular option for refinancing, declined last week, too, from 5.49 percent the week of July 25 to 5.40 percent. For one-year adjustable rate mortgages, rates fell to 4.08 percent last week, compared with 4.17 percent the previous week.

The nationwide averages for mortgage rates do not include add-on fees known as points. Thirty-year mortgages carried an average 0.7-point fee last week. Fifteen-year and one-year ARMs each carried an average fee of 0.6 point.

A year ago, rates on 30-year mortgages averaged 6.14 percent, 15-year mortgages were at 5.44 percent and one-year ARMs were at 3.68 percent.

The Mortgage Bankers Association said refinancing accounted for 35.8 percent of all home-mortgage applications filed last week. That's down from 36.8 percent the previous week.

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