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Mortgage rates at six-month low

Mortgage rates around the country dropped this week to a six-month low.
/ Source: The Associated Press

Mortgage rates around the country dropped this week to a six-month low.

The average rate on 30-year mortgages declined to 5.66 percent, down from 5.87 percent last week, Freddie Mac, the mortgage giant, said Thursday in its weekly nationwide survey of mortgage rates. This week's rate was the lowest since July 11 when the rate averaged 5.52 percent.

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 4.97 percent this week _ also the lowest since July 11 _ and down from 5.17 percent last week.

Rates for one-year adjustable mortgages also were down this week, averaging 3.62 percent compared to 3.76 percent last week. This week's rate was the lowest since July 18.

The decline in mortgages rates comes as Wall Street investors and economists believe that a low inflation environment and a still-struggling job market are likely to cause Federal Reserve policy-makers to keep short-term interest rates near rockbottom levels for some time.

Against that backdrop, "mortgage rates will remain low and affordable," predicted Freddie Mac economist Amy Crews Cutts.

A year ago, rates on 30-year mortgages averaged 5.97 percent, 15-year mortgages were 5.36 percent and one-year adjustable mortgages stood at 4.03 percent.

The nationwide averages for mortgage rates do not include add-on fees known as points. Thirty-year mortgages carried an average fee of 0.6 point this week, while 15-year and one-year ARMs each carried an average fee of 0.7 point.

The housing market, powered by low mortgage rates, helped to support the economy throughout 2003. Private economists, however, expect home sales to slow a bit in 2004.

Home-mortgage refinancing activity also has been kept healthy by low mortgage rates. The Mortgage Bankers Association said refinancing accounted for 51.6 percent of all mortgage applications filed last week, up from 49.7 percent the previous week.