Inflation fears ease, mortgage rates dip
Real estate
Inflation fears ease, mortgage rates dip
March 17, 2006
MARTIN CRUTSINGER and JEANNINE AVERSA
ASSOCIATED PRESS
WASHINGTON — Rates on 30-year mortgages, which had jumped to the highest level in 2 1/2 years, edged down slightly this week.
Mortgage giant Freddie Mac reported Thursday that rates on 30-year, fixed-rate mortgages averaged 6.34% this week, the second-highest level since mid-November.
This week’s rate was down slightly from a nationwide average of 6.37% last week, which had been the highest level since 30-year mortgages averaged 6.44% the week of Sept. 5, 2003.
“Market indicators this week seemed to point to less of a threat of inflation, and that allowed rates to drift lower,” said Frank Nothaft, chief economist at Freddie Mac.
He noted that while the government reported Thursday that construction of new homes and apartments dropped by 7.9% in February, that was a smaller decline than had been expected and followed an unusually strong January.
“This is a good sign that housing activity, although slowing from record levels set in the past few years, will continue to remain healthy this year,” Nothaft said.
Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing a home mortgage, averaged 5.98% this week, down from 6% last week.
One-year adjustable-rate mortgages fell to 5.37%, down from 5.45% last week.
Rates on 5-year hybrid adjustable-rate mortgages dropped to 5.93%, down from 6.03% last week.
The mortgages rates do not include add-on fees known as points. The 1-year ARM carried an average fee of 0.8 point, while the other three mortgage categories carried nationwide average fees of 0.7 point.
A year ago, 30-year mortgages averaged 5.95%, 15-year mortgages stood at 5.47%, 1-year adjustable-rate mortgages were at 4.20% and 5-year hybrid adjustable-rate mortgages averaged 5.31%.
In other real estate news: Late mortgage payments climbed to a 2 1/2 -year high in the final quarter of 2005 as Gulf Coast homeowners struggled with fallout from the hurricanes, and lofty energy prices along with rising interest rates squeezed the budgets of others across the country.
The Mortgage Bankers Association, in its quarterly mortgage survey, reported Thursday that the percentage of mortgage payments that were 30 or more days past due for all loans tracked rose to 4.70% in the October-to-December quarter of last year.
That was up from the prior quarter’s 4.44% delinquency rate and was the highest since the second quarter of 2003.
The association’s survey covers 41.2 million loans.
One factor in the growth of late mortgage payments is the problems people faced in the communities devastated by last year’s hurricanes, which have pushed up delinquency rates in Louisiana and Mississippi, the association said.
But other factors also played a role.
“We have been expecting an uptick in delinquencies due to a number of factors: the seasoning of the loan portfolio, the increased share of the portfolio that are adjustable-rate mortgages and subprime mortgages, as well as the elevated level of energy prices and rising interest rates,” said Doug Duncan, the association’s chief economist.