Originally created 12/30/04

Mortgage rates near record lows for all of 2004



WASHINGTON - Mortgage rates around the country moved up this week, but rates on 30-year mortgages for all of 2004 registered their second-lowest year on record.

Freddie Mac's weekly survey, released Wednesday, showed that rates on 30-year, fixed-rate mortgages increased to 5.81 percent this week, compared with 5.75 percent last week.

For all of 2004, rates on benchmark 30-year mortgages averaged 5.84 percent, second only to last year's 5.83 percent, the lowest annual rate in Freddie Mac's record keeping, a Freddie Mac spokeswoman said. The rate came in under 6 percent for the last 22 weeks of this year.

Long-term mortgage rates remained well behaved even as the Federal Reserve boosted short-term interest rates five times this year. That's because inflation, while creeping higher, is not viewed as a danger to the economy, analysts said.

Low mortgage rates have powered homes sales, which are expected to hit record highs for all of 2004, analysts said.

"Although mortgage rates are expected to rise in 2005, it will not be to a big enough degree to take much of the steam out of the housing industry," said Amy Crews Cutts, Freddie Mac's deputy chief economist. "Next year, sales may drop off slightly from this year's banner pace, but the industry will continue to be healthy and robust well into the future."

Some analysts believe rates on 30-year mortgages could climb to around 6.5 percent by the end of next year, which would still be considered low by historical standards. A few think rates could hit 7 percent next year.

Rates on 15-year, fixed-rate mortgages, a popular option for refinancing, rose this week to 5.23 percent, compared with 5.18 percent last week.

Rates on one-year, adjustable-rate mortgages increased to 4.19 percent this week, up slightly from 4.17 percent last week.

The nationwide averages for mortgage rates this week do not include add-on fees known as points. Each loan type carried a 0.6 point fee.

A year ago, rates on 30-year mortgages averaged 5.85 percent, with 15-year mortgages at 5.15 percent and one-year ARMs at 3.72 percent.

The Mortgage Bankers Association, meanwhile, reported that refinancing accounted for 46.2 percent of all mortgage loan applications filed last week, down from 48.9 percent the previous week.

On the Net:

Freddie Mac: http://www.freddiemac.com