Long-term mortgage rates this week fell on news of falling industrial production and consumer sentiment, Freddie Mac reported today.
The average 30-year fixed-rate loan sank to 5.98 percent from last week’s 6.01 percent, well below the year-ago average of 6.37 percent, according to Freddie Mac. Rates on 15-year fixed loans dipped to 5.55 percent from 5.6 percent, much lower than the 6.06 percent reported a year ago.
To qualify for these rates, borrowers must pay points, or fees that lenders charge for loan processing expressed as a percent of the loan, which this week averaged 0.5 and 0.6, respectively, on the 30- and 15-year loans.
"Interest rates for fixed-rate mortgages fell slightly this week on news of both weaker industrial production in April and consumer sentiment falling in May to its lowest level since June 1980," said Frank Nothaft, Freddie Mac vice president and chief economist, in a prepared statement. "ARM rates, however, rose slightly on market forecasts that the Federal Reserve (Fed) may not pursue any more rate cuts over the near term. For instance, the federal funds futures market suggests virtually no change in monetary policy over the next few months and the Fed viewed the last rate cut to be a ‘close call,’ according to the minutes of its most recent policy Committee meeting."
On Treasury-indexed adjustable-rate mortgages (ARMs), rates were up an average of 5 basis points from last week, with the five-year hybrid ARM rising from 5.57 percent to 5.61 percent and the one-year ARM gaining from 5.18 percent to 5.24 percent. Points paid on the five- and one-year loans averaged 0.6.
A year ago, rates on the five- and one-year ARMs averaged 6.02 percent and 5.64 percent, respectively.
Nothaft added that the latest home construction news is not all that rosy, saying, "Housing woes still plague the economy. Although housing starts unexpectedly rose in April, all of the gains were in multifamily properties. New construction on one-unit homes fell to 692,000 homes (annualized), which was the least since January 1991 and almost 62 percent below the peak set in November 2005. In addition, home-builder confidence matched an all-time record low in May."
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