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Mortgage rates head south
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August 17, 2000: 2:42 p.m. ET
Home loan rates dip on hopes that no action will be taken at next Fed meeting
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NEW YORK (CNNfn) - Mortgage rates maintained their downward turn this week, aided by the market's confidence that the Federal Reserve will not take any action at its meeting next Tuesday, according to a report released by Freddie Mac.
A 30-year fixed rate mortgage (FRM) averaged 7.96 percent for the week ending Aug. 18, down from 8.04 percent a week earlier. The same mortgage was 7.93 percent last August. The 30-year FRM was the lowest since the week of Dec. 24, 1999, when it also averaged 7.96 percent.
The average for a fixed-rate 15-year mortgage was 7.70 percent this week, down from last week's average of 7.75 percent. Last August, the rate was 7.53 percent. The 15-year FRM was the lowest since the week of Dec. 31, 1999, when it stood at 7.66 percent.
A one-year adjustable-rate mortgage (ARM) averaged 7.21 percent sliding from 7.28 percent last week. The same mortgage averaged 6.18 percent a year ago.
[Click here to see a breakdown of U.S. mortgage rates by region.]
 "The results of the Producer Price Index, which showed inflation to be under control, bolstered the market's confidence that the Fed will take no action. This allowed mortgage rates to ease once again," said Robert Van Order, chief economist for Freddie Mac. "In the meantime, housing starts fell for the third straight month in July, another indication that the economy is slowing and the Fed need not intervene at this time."
Van Order said that when the Fed meets, any decision it makes will have some effect on mortgage rates in the future.
Freddie Mac (FRE: Research, Estimates), or Federal Home Mortgage Corp., is a publicly traded company that the government established in 1970 to provide a flow of funds to mortgage lenders.
It buys mortgages from banks, bundles them, and then resells them as mortgage-backed securities. Its products, and the products of other similar entities, have become increasingly popular as an alternative to government-backed bonds, particularly with international investors. 
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