WASHINGTON - Rates on 30-year mortgages fell for a third straight week as investors' concerns about inflation were eased by reports showing that prices fell in December.
The weekly survey released Thursday by the mortgage company Freddie Mac showed that rates on 30-year, fixed rate mortgages averaged 5.67 percent for the week ending Jan. 20, compared with 5.74 percent last week.
Low mortgage rates have powered the housing industry in recent years. Sales are expected to set records for both new homes and existing homes when all the results for 2004 are in.
Analysts are forecasting that housing will enjoy another good year in 2005 if mortgage rates do not rise too sharply, given the Federal Reserve's credit tightening campaign to ensure that inflation stays in check.
Economists said worries about inflation were eased with Wednesday's report showing that consumer prices dipped by 0.1 percent in December, reflecting the biggest drop in energy costs since July.
"Financial markets see inflation as being well managed by the Fed and that allows long-term interest rates to remain low, with mortgage rates even falling a little more this week," said Frank Nothaft, Freddie Mac's chief economist. He noted that a second report from the government this week showed that home and apartment construction rebounded strongly last month.
Rates on 15-year, fixed-rate mortgages, a popular option for refinancing, declined this week to 5.15 percent, from 5.19 percent last week. Rates on one-year adjustable-rate mortgages were 4.11 percent this week, little changed from last week's 4.10 percent.
Five-year hybrid adjustable rate mortgages averaged 5.05 percent this week, unchanged from last week. These mortgages have a fixed-rate for five years and then they adjust each year after that.
The nationwide averages for mortgage rates this week do not include add-on fees known as points. The thirty-year and 15-year mortgages each carried a 0.7 point fee. The five-year and one-year ARMs both carried fees of 0.6 point.
A year ago, rates on 30-year mortgages averaged 5.64 percent with 15-year mortgages at 4.95 percent and one-year ARMs at 3.56 percent. There isn't a figure for five-year ARMs because Freddie Mac just began tracking those rates this year.
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Freddie Mac: http://www.freddiemac.com
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