August 22, 2004
BY MARTIN CRUTSINGER
ASSOCIATED PRESS

Mortgage rates declined again this week with 30-year mortgages remaining below the 6 percent level for a third consecutive week.

The mortgage giant Freddie Mac said its latest nationwide survey showed rates on 30-year, fixed-rates mortgages fell to 5.81 percent last week. That's down from the average rate of 5.85 percent the week before and is the lowest level for 30-year mortgages in more than four months, since they averaged 5.79 percent the week of April 8.

Rates on 30-year mortgages hit a high this year of 6.34 percent the week of May 13. Since then, they have drifted downward, reflecting a significant slowdown in economic activity in the late spring and early summer.

Analysts said weak economic growth was easing investors' fears that inflation will worsen suddenly and make their bond holdings worth less.

"Mortgage rates eased even further this week in response to a setback in economic growth during June and possibly July," said Frank Nothaft, chief economist at Freddie Mac. "However, we believe the slowdown to be temporary and we expect growth to pick up in the second half of this year."

Nothaft said the low rates were helping to keep sales of new and existing homes at record levels and he predicted "2004 will be another banner year for the housing industry."

The new Freddie Mac survey showed rates on 15-year, fixed-rate mortgages, a popular option for refinancing, also declined last week to 5.19 percent, down from 5.24 percent the week before. For one-year adjustable rate mortgages, rates dipped to 4.01 percent, down from 4.08 percent.

The nationwide averages for mortgage rates do not include add-on fees known as points. The 30-year mortgage carried an average 0.7-point fee last week while the 15-year and 1-year mortgages both carried 0.6 point fee.

A year ago, rates on 30-year mortgages averaged 6.24 percent with 15-year mortgages at 5.58 percent and one-year ARMs at 3.75 percent.

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