Associated Press
Saturday, January 26, 2008

Rates on 30-year mortgages dropped for a fourth straight week, reaching the lowest level in nearly four years and raising hopes that low rates will help spur a rebound in the hard-hit housing industry.

Freddie Mac reported Thursday that 30-year, fixed-rate mortgages averaged 5.48 percent this week, down from 5.69 percent last week.

It was the fourth consecutive decline and the third straight week that rates have been below 6 percent. The new rate was the lowest for 30-year mortgages since they averaged 5.40 percent the week of March 25, 2004.

Economists attributed the decline to further weak news on the economy combined with the biggest reduction of a key interest rate by the Federal Reserve in more than 20 years as it steps up its efforts to combat a threatened economic recession.

"When the Federal Reserve cut the target for the federal funds rate by three-quarters of a percentage point, the action was extraordinary in both the magnitude and the timing of the rate cut," said Frank E. Nothaft, chief economist at Freddie Mac.

Other types of mortgages also showed declines this week.

Rates on 15-year mortgages, a popular choice for refinancing, dropped to 4.95 percent this week from 5.21 percent.

Rates on five-year adjustable-rate mortgages declined to 5.13 percent from 5.40 percent, while the average rate on one-year ARMs fell to 4.99 percent from 5.26 percent.

The mortgage rates do not include add-on fees known as points. Thirty-year mortgages, 15-year mortgages and five-year ARMs all carried a nationwide average fee of 0.4 point. One-year ARMs had an average fee of 0.6 point.

A year ago, 30-year mortgages stood at 6.25 percent, while rates on 15-year mortgages were at 5.98 percent. Five-year adjustable-rate mortgages averaged 6.00 percent, and one-year ARMs were at 5.49 percent.