Thursday, December 09, 2004

Mortgage Rates Fall Sharply



Associated Press

Mortgage rates around the country fell sharply this week, a development that should bring a dose of good cheer for people wanting to buy a home.

Freddie Mac's weekly survey released Thursday showed that rates on 30-year, fixed-rate mortgages dropped this week to 5.71 percent, compared with 5.81 percent last week. This week's rate was the lowest since early November.

Rates on 30-year mortgages hit a high this year of 6.34 percent the week of May 13. After that, rates, while bouncing around, had drifted lower as the economy hit a soft spot. Rates shot up last week as the economy flashed growth signs, but fell this week as a lackluster jobs report eased investors' inflation fears.

"Responding to a weak labor market report that showed November job growth to be far less than had been anticipated, long-term yields - and that includes mortgage rates - reversed last week's hike," said Frank Nothaft, Freddie Mac's chief economist.

Rates on 15-year, fixed-rate mortgages, a popular option for refinancing, sank to 5.14 percent this week, from 5.23 percent last week.

One-year adjustable rate mortgages fell to 4.15 percent, compared with last week's 4.19 percent.

The nationwide averages for mortgage rates do not include add-on fees known as points. Thirty-year and one-year ARMs each carried a 0.7 point fee. Fifteen-year mortgages carried a 0.6 point fee.

A year ago, rates on 30-year mortgages averaged 6.02 percent with 15-year mortgages at 5.36 percent and one-year ARMs at 3.77 percent.

Separately, the seasonally adjusted percentage of mortgage payments 30 or more days past due dipped in the third quarter to 4.41 percent, from 4.43 percent in the previous quarter, the Mortgage Bankers Association reported.

The share of mortgages that started the foreclosure process in the July-to-September quarter stood at 0.39 percent, unchanged from the previous quarter. "The performance of delinquencies and foreclosures is improving as expected" helped by a solidly expanding economy, said Doug Duncan, the association's chief economist.

In another report, U.S. households saw their net worth in the third quarter rise to a record $46.68 trillion, reflecting in part higher home and other real-estate values, the Federal Reserve said. The third quarter's figure surpassed the previous all-time high registered in the second quarter of this year.

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