Mortgage rates drop for second week

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BY MARTIN CRUTSINGER
AP Economics Writer | Friday, November 14, 2008 | (No comments posted.)

WASHINGTON | Mortgage rates dropped for a second straight week, reflecting the impact the weakening economy is having on financial markets.

Freddie Mac, the mortgage giant, reported Thursday that rates on 30-year, fixed-rate mortgages averaged 6.14 percent this week, down from 6.20 percent last week. It marked a sharp decline since rates hit a high of 6.46 percent two weeks ago.

Analysts attributed the back-to-back decreases to financial markets growing more confident that the Federal Reserve will cut rates again at its final meeting of the year in December in an effort to combat a severe slowdown many economists fear could deepen into a prolonged recession.

"Long-term mortgage rates fell slightly this week as signs the overall economy is weakening brought interest rates down market-wide," said Frank Nothaft, chief economist for Freddie Mac.

Thirty-year mortgage rates hit a high for the year of 6.63 percent in late July and then dropped below to a seven-month low of 5.78 percent for the week ending Sept. 18.

Rates on other types of mortgages also fell this week with the exception of one-year, adjustable-rate mortgages which showed a slight increase.

For 15-year, fixed-rate mortgages, which are popular with people who are refinancing, rates dropped to 5.81 percent, from 5.88 percent last week.

Rates on five-year, adjustable-rate mortgages fell to 5.98 percent, from 6.19 percent last week. Rates on one-year, adjustable-rate mortgages edged up slightly to 5.33 percent, from 5.25 percent last week.

The mortgage rates do not include add-on fees known as points. The nationwide fee for 30-year and 15-year mortgages averaged 0.7 point last week. The fee on five-year, adjustable-rate mortgages averaged 0.6 point, while the fee on one-year adjustable-rate mortgages averaged 0.5 point.

A year ago the nationwide average rate on 30-year mortgages stood at 6.24 percent, 15-year mortgage rates averaged 5.88 percent, five-year adjustable-rate mortgages were at 5.96 percent, and one-year adjustable-rate mortgages stood at 5.50 percent.

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