Mortgage rates around the country dropped for the second straight week, welcome news to people thinking about buying a home or refinancing the one they already own.
The average rate on 30-year mortgages fell to 5.64 percent — the lowest rate in six months, and down from 5.66 percent last week — Freddie Mac, the mortgage giant, said Thursday in its weekly nationwide survey of mortgage rates.
Rates on 30-year mortgages have bounced around after sinking to a four-decade low of 5.21 percent in the middle of June.
For 15-year mortgages, a popular option for refinancing, rates decreased to 4.95 percent this week, down from 4.97 percent last week. Rates for one-year adjustable mortgages dipped to 3.56 percent, compared with 3.62 percent last week.
"Mortgage rates remain low as the economy picks up steam, allowing families a chance to purchase a new home or refinance if they haven't yet," said Frank Nothaft, Freddie Mac's chief economist. "With low prospects of inflation increasing anytime soon, mortgage rates should remain affordable over the first half of this year."
Home-mortgage refinancing activity also has been kept healthy by low mortgage rates. The Mortgage Bankers Association said refinancing accounted for 57.7 percent of all mortgage applications filed last week, up from 51.6 percent the previous week.
The nationwide averages for mortgage rates do not include add-on fees known as points. Thirty-year and 15-year mortgages each carried an average fee of 0.6 point this week, while one-year adjustable mortgages carried an average fee of 0.7 point.
A year ago, rates on 30-year mortgages averaged 5.91 percent, 15-year mortgages were 5.31 percent and one-year adjustable mortgages stood at 3.93 percent.
The housing market, powered by low mortgage rates, helped to support the economy throughout 2003. The Mortgage Bankers Association, in an economic outlook Thursday, predicted home sales would slow slightly over the next two years.
In other projections, the association said 30-year fixed-rate mortgages would end 2004 in the range of around 6.3 percent and would end 2005 at around 7.1 percent.