Mortgage rates see big drop
Long-term rates hit lowest level since first of the year; 30-year fixed hits 6.18 percent.
NEW YORK (CNNMoney.com) -- Mortgage rates continued their downward slide, reaching their lowest point since the first of the year on slower growth in the market, according to a survey released Wednesday.
The 30-year fixed-rate mortgage averaged 6.18 percent for the week ending Nov. 22, down from 6.24 percent, according to Freddie Mac's (Charts) Primary Mortgage Market Survey. A year ago, the 30-year averaged 6.28 percent. The 30-year peaked for the year in July, at 6.80 percent.
The 15-year fixed-rate mortgage averaged 5.91 percent this week, down from 5.94 percent last week. A year ago, it averaged 5.81 percent. This is the lowest the 15-year has been since the week ending March 2, 2006, when it averaged 5.89 percent.
Rates for five-year adjustable-rate mortgages (ARMs) came in at 5.99 percent this week, down from 6.04 percent last week. A year ago, they averaged 5.75 percent.
One-year ARMs averaged 5.49 percent, down from 5.54 percent last week. A year ago, the one-year ARM averaged 5.14 percent.
"Housing starts in October were down more than expected, which the market saw as an indication housing would be a bigger drag on the economy than had previously been thought," said Frank Nothaft, Freddie Mac vice president and chief economist, in a statement. "Slower growth usually means less inflation and less inflation means lower interest rates. Hence, the drop in mortgage rates this week."
Experts, such as the Mortgage Banker's Association chief economist, Doug Duncan, had forecast that interest rates would be fairly stable for the year; they were not expected to exceed 7.0 percent for a 30-year fixed. Few forecasters, though, predicted they would drop this precipitously.
For a borrower, the lower rates add up to substantial savings. The monthly payment on a $200,000, 30-year fixed-rate mortgage at 6.8 percent comes to $1,303.85. At 6.18 percent, it's just $1,222.34 - $81.51 less, or $29,343 over the course of the loan.
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