Mortgage rates back off again

NEW YORK (CNNMoney.com) -- Mortgage rates eased slightly for the second week in a row after taking their biggest jump in four years two weeks ago, Freddie Mac said Thursday.

The government-sponsored loan buyer said the average rate on a 30-year fixed-rate loan slipped to 6.67 percent for the week ending June 28, from 6.69 percent the previous week.

Last year at this time, 30-year mortgage rates averaged 6.78 percent.

"This week we saw further effects of the current housing recession," Frank Nothaft, Freddie Mac (Charts, Fortune 500) vice president and chief economist said in a statement. "May's existing home sales fell 0.3 percent to the slowest pace since June 2003, and the number of months houses were available for sale rose to 8.9, the longest since June 1992."

Rising rates, among other factors, have caused industry groups, the Mortgage Bankers Association (MBA) and the National Association of Realtors to push back their forecasts for a home price recovery. Both groups are now looking to early 2008, compared with a previous outlook for mid-2007.

Doug Duncan, chief economist for the MBA, has said he expects mortgage rates to top out near 7 percent by the end of the year.

If rates go up, would-be home buyers face higher monthly mortgage payments, cutting into overall affordability.

The rate on a 15-year loan averaged 6.34 percent, down from 6.37 percent a week ago. A year ago, the 15-year rate averaged 6.43 percent.

Five-year Treasury-indexed adjustable-rate mortgages (ARMs) averaged 6.30 percent this week, down from 6.31 percent last week. A year ago, the 5-year ARM averaged 6.39 percent.

One-year Treasury-indexed ARMs averaged 5.65 percent this week, down from 5.66 percent last week. At this time last year, they averaged 5.82 percent.