Mortgage Rates Drop to 6.14 Percent
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Thursday, November 30, 2006; 5:32 PM
Long-term U.S. mortgage rates fell this week to their lowest levels since January, according to a report released today, but the chief economist for government-backed mortgage company Freddie Mac said rates may soon be heading back up.
The rate on a 30-year, fixed-rate mortgage averaged 6.14 percent this week, down from 6.18 percent last week, Freddie Mac announced today. That's the lowest rate since late January, when the 30-year mortgage rates averaged 6.12 percent.
Frank Nothaft, chief economist at Freddie Mac, called the declining rates "an important shot in the arm for the housing industry, making housing more affordable."
But he predicted rates on 30-year mortgages will average 6.5 percent next year.
"We don't see rates moving any lower" than they are today, Nothaft said in an interview.
There are mixed signs that the declining mortgage rates are having a positive impact on home sales.
The Commerce Department reported yesterday, for example, that new-home sales fell in October by 3.2 percent, the largest drop since July.
But more buyers were out looking for houses in November, according to a report released today by Banc of America analyst Daniel Oppenheim.
The report said buyer traffic improved over the previous month in 33 of the 39 markets that were surveyed. Oppenheim attributed the increased traffic to lower interest rates and lower home prices.
"Our survey showed the greatest improvement in traffic in markets that experienced the sharpest price declines, including Arizona, California, Florida and Washington D.C.," Oppenheim wrote.
Buyer interest in the Washington market improved "dramatically" in November, he added.
Home prices grew 0.86 in the third quarter of this year, the slowest pace since 1998, the Office of Federal Housing Enterprise reported today.
This slow growth "provides more evidence that the long-forecasted national depreciation in housing prices is occurring," the agency's director, James B. Lockhart, said in a statement.
Mortgage rates, meanwhile, have been on a steady but bumpy decline since mid-summer, according to Freddie Mac.
Rates on 15-year, fixed-rate mortgages averaged 5.87 percent this week, down from 5.91 percent last week.
One-year adjustable rate mortgages, rates fell to 5.46 percent, down from 5.49 percent last week.
These rates do not include add-on fees, known as points.
