NEW YORK (CNN/Money) -
Mortgage rates drifted lower this week, as concerns about a potential war in Iraq and continued uncertainty over economic recovery held rates in check.
Freddie Mac reported Thursday that the 30-year mortgage averaged 6.03 percent, with an average of 0.6 of a point payable up front to the lender, in the week ending Dec. 20. The rate fell from an average 6.04 percent last week and remained below its 7.17 percent average of a year ago.
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The 15-year fixed-rate mortgage averaged 5.42 percent, down from 5.46 percent last week and down from 6.65 percent last year. The 15-year mortgage averaged 0.6 of a point payable up front to the lender.
One-year adjustable-rate mortgages (ARMs), loosely indexed to the 10-year Treasury note, averaged 4.07 percent. The one-year ARM slipped from 4.18 percent last week and averaged 0.6 of a point payable up front. A year ago, the one-year ARM averaged 5.27 percent. The one-year ARM hit the lowest level since Freddie Mac began tracking it in 1984.
"It was no great surprise that housing starts rose for the second time in three months since mortgage rates in November reached levels not seen since the mid-1960s," said Frank Nothaft, Freddie Mac chief economist. "Since mortgage rates are not expected to increase significantly, we remain confident that the housing industry will continue to be alive and active well into 2003."
Freddie Mac's average mortgage rates are based on a survey of 125 lenders nationwide. The rates include those on mortgages accepted by borrowers with good credit ratings who place a 20 percent down payment on their homes, according to Freddie Mac. The total amount of each mortgage considered for the survey doesn't exceed a $300,700 limit.
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Freddie Mac (FRE: up $1.35 to $60.40, Research, Estimates), or Federal Home Loan Mortgage Corp., is a publicly traded company 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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