Mortgage rates fall after last week's spike
Rates on 30-year fixed mortgages fell to 6.04% from 6.46% on news of mild inflation, weak housing market.
NEW YORK (CNNMoney.com) -- The 30-year mortgage rate fell this week after last week's spike, which was its biggest weekly jump since April 1987.
Mortgage finance firm Freddie Mac (FRE, Fortune 500) reported Thursday that 30-year fixed-rate mortgages averaged 6.04% this week. That's down from 6.46% last week and below 6.33%, where the rate stood a year ago.
Frank Nothaft, Freddie Mac vice president and chief economist, attributes the decline in mortgages rates to "news of tame inflation and a weaker housing market."
New construction of one-family homes fell in September to the lowest annual rate since February 1982. And housing starts are 70% below their January 2006 peak, while homebuilder confidence reached an all-time low in October, according to Nothaft.
Rates on 15-year fixed-rate mortgages fell to 5.72%, from 6.14% last week. A year ago, that rate was 5.99%
The five-year adjustable-rate mortgage fell to 6.06%, down from last week at 6.14%. A year ago, the rate was 6.03%.
The rate on a one-year adjustable-rate mortgage increased slightly to 5.23%, compared to 5.16% last week. At this time last year, the rate was 5.66%.
Keith Gumbinger of HSH Associates, a publisher of mortgage information, attributed the prior week's spike to the massive federal bailout (full story). The Treasury needs to sell a great number of new Treasury bills to raise money to fund new government guarantees.