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Mortgage Rates Hit New Low

Mortgage Rates Hit New Low

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WASHINGTON (AP) -- For the third time this year, weekly rates on 30-year mortgages have reached a new low.

The average interest rate on 30-year, fixed-rate mortgages dropped to 5.79 percent, Freddie Mac, the mortgage company, reported Thursday in its latest nationwide survey. The previous low rate was last week's 5.84 percent, and before that it was the rate of 5.85 percent for the week ending Jan. 3.

This week's rate was the lowest since Freddie Mac began tracking 30-year rates in 1971. Records that reach back earlier than Freddie Mac's indicate that rate is the lowest since the early 1960s.

Rates for 15-year fixed-rate mortgages, a popular option for refinancing, edged down this week to 5.14 percent, compared with 5.21 percent last week. The new rate is the lowest since Freddie Mac began tracking 15-year mortgages in 1991.

"Debilitating forces, such as looming war clouds in the Mideast, declining consumer confidence and other issues are making an economic rebound difficult," said Frank Nothaft, Freddie Mac's chief economist. "And when the economy is weak, interest rates tend to follow suit," he said.

Rates for one-year adjustable rate mortgages, however, rose to 3.83 percent, up slightly from last week's 3.81 percent.

Low mortgage rates propelled sales of both new and existing homes to record levels last year and have made for brisk home-mortgage refinancing activity. As consumers swap higher-interest rate home loans for lower-interest rate ones, the extra cash has helped to support consumer spending, one of few sources of strength for the economy.

The Mortgage Bankers Association of America said total mortgage applications filed last week rose by 5.5 percent. Refinancing activity accounted for 75.3 percent of total applications, compared with 72.5 percent the previous week.

This week's mortgage rates do not include add-on fees known as points. Each loan type carried an average fee of 0.6 point this week.

A year ago, rates on 30-year mortgages averaged 6.80 percent, 15-year mortgages were 6.28 percent and one-year adjustable mortgages stood at 4.94 percent.

Low mortgage rates should continue to support the housing market, economists said.

Existing-home sales -- the biggest part of the housing market -- soared to a record monthly level in January. New-home sales, however, plunged in January after hitting an all-time monthly high level in December.

"I'm not worried about much of a crack in the housing pillar or a crack that would last long because the mortgage story is so good," said David Seiders, chief economist at the National Association of Home Builders.

(Copyright 2003 by The Associated Press. All Rights Reserved.)

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