Rates on 30-year mortgages dip

Freddie Mac says the average rate on the long-term home loan fell slightly last week. But upbeat economic data kept mortgage rates elevated overall.

By Ben Rooney, CNNMoney.com staff writer
May 8, 2008

NEW YORK (CNNMoney.com) -- Rates on 30-year mortgages edged lower this week but remained above 6% as signs of economic stability overshadowed continued weakness in the housing market.

Mortgage giant Freddie Mac (FRE, Fortune 500) reported Thursday that 30-year fixed-rate mortgages averaged 6.05% this week, down slightly from 6.06% last week.

"Despite a weak housing market, mortgage rates remained almost unchanged this week based on better-than-expected economic data releases that indicated the economy still has some staying power," said Frank Nothaft, Freddie Mac vice president and chief economist.

The Labor Department said last week that employers trimmed 20,000 jobs in April and the unemployment rate fell slightly to 5% from 5.1%. Economists had expected a loss of 75,000 jobs and forecast the unemployment rate to expand to 5.2%.

Reports on the manufacturing and service sectors also showed surprisingly robust activity last week, suggesting the economy could be recovering.

Despite the unexpected signs of improvement, Nothaft points out that homeownership has declined so far this year.

"The housing market is still struggling amid falling house prices and stricter lending standards. Coupled with higher delinquency and foreclosure rates, a smaller share of families own their homes this year," he said.

The national homeownership rate held at 67.8 percent in the first quarter of 2008, down from its recent peak of 69.0 percent in the third quarter of 2006 and was the lowest rate since 67.6 percent in the second quarter of 2002, according to the Census Bureau.

Rates on other types of mortgages were mixed.

Freddie Mac said 15-year fixed-rate loans averaged 5.60%, up slightly from 5.59% last week. A year ago, the 15-year rate averaged 5.92%.

Rates on five-year adjustable-rate mortgages (ARMs) averaged 5.67%, down from 5.73% last week. A year ago, the 5-year rate averaged 5.92%.

One-year Treasury-indexed ARMs averaged 5.29%, unchanged from the last two weeks. At this time a year ago, the 1-year ARM averaged 5.48%.

Source: CNNMoney.com May 8. 2008
http://money.cnn.com/2008/05/08/real_estate/mortgage_rates/index.htm?postversion=2008050811