Rates for 30-year and 15-year mortgages dip; one-year adjustable rate mortgages unchanged

By

Posted 2:46PM on Thursday, January 17, 2002

WASHINGTON - Mortage rates, helped by some comments from Federal Reserve Chairman Alan Greenspan, fell this week with 30-year mortgages dropping once again below the 7 percent level. The average interest rate on 30-year fixed-rate mortgages declined to 6.83 percent, from 7.06 percent last week, according to a nationwide survey released Thursday by Freddie Mac, the mortgage company. It was the fourth consecutive weekly decline and it pushed rates below 7 percent for the first time since the first week in December. Rates on 30-year mortgages had fallen to 6.45 percent in early November, the lowest level since Freddie Mac began conducting its nationwide survey in 1971. While rates have moved slightly higher since that time, analysts still view the current levels as extremely favorable for home buyers. Frank Nothaft, Freddie Mac's chief economist, said that Greenspan's comments last week have convinced many in the bond market that a 12th interest rate cut will occur when the Fed next meets on Jan. 29-30. "Greenspan remarked that we were not out of the woods yet, leading the financial markets to suspect another rate cut may be in the offing," Nothaft said. Fifteen-year mortgages, a popular option for refinancing, slipped to 6.31 percent this week from 6.55 percent the week before. A year ago, rates for 30-year mortgages averaged 7.02 percent and rates for 15-year mortgages averaged 6.63 percent. On one-year adjustable-rate mortgages, lenders were asking an average initial rate of 5.08 percent, down from 5.26 percent the previous week. Last year at this time, ARMs stood at 6.64 percent. These rates do not include add-on fees known as points, which averaged around 1 percent of the loan amount for all three types of mortgages.