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Record lows par for mortgage rates
30-year mortgage drops to 5.21%, 15-year dips to 4.60%, 1-year ARM falls to 3.54%.
June 12, 2003: 11:46 AM EDT

NEW YORK (CNN/Money) - Mortgages rates dropped and hit the tenth record of the year as yields on Treasurys reached 45-year lows as investors prepare for a widely expected interest rate cut at the Federal Reserve's next meeting.

The 30-year mortgage rate fell to its sixth consecutive record low at 5.21 percent in the week ending June 13, with an average of 0.5 of a point payable up front, mortgage lender Freddie Mac reported Thursday. The 30-year averaged 5.26 percent last week and 6.71 percent a year earlier.

The 15-year fixed-rate mortgage averaged 4.60 percent, with 0.5 of a point up front, down from 4.66 percent last week and well below the 6.17 percent a year ago.

One-year adjustable-rate mortgages (ARMs), loosely indexed to the 10-year Treasury note, hit 3.54 percent, down from 3.59 percent last week. At the same time last year, the one-year ARM averaged 4.67 percent.

"Treasury rates continued to drop this week to 45-year lows in anticipation that the Fed may cut rates given the continuous weakness in the economy and the absence of any inflationary pressures," said Frank Nothaft, Freddie Mac's chief economist.

"Because of the drop in rates since last month, we have raised our forecast for origination volume for 2003 to almost $3.3 trillion in expectation of higher home sales and greater refinancing levels," he said.

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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 $322,700 limit.

Freddie Mac (FRE: down $2.70 to $47.04, 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.  Top of page

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