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30-Year Rates Dip Back Below 6%

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From News Services and Staff Reports
Saturday, March 22, 2008; Page F09

Rates on 30-year mortgages this week dropped below 6 percent for the first time in more than a month, reflecting aggressive efforts by the Federal Reserve to cut interest rates to protect the economy from a serious recession.

The mortgage company Freddie Mac reported Thursday that 30-year, fixed-rate mortgages averaged 5.87 percent this week. That was down from 6.13 percent last week.

Rates on 30-year mortgages had dropped below the 6 percent threshold in the second week of January and stayed there for six weeks as the sharp economic slowdown stirred concerns about a possible recession.

In the past month, bond markets had grown worried about rising inflation pressures at the same time that the economy is slowing. But the meltdown of the investment bank Bear Stearns prompted the Fed to move aggressively to pump money into the financial system and slash a key lending rate by three-fourths of a percentage point this week.

Analysts said the Fed's efforts had helped to ease pressure on interest rates that had been generated by higher inflation readings.

Other categories of mortgages also showed declines this week.

The average rate on 15-year, fixed-rate mortgages, a popular choice for refinancing, fell to 5.27 percent from 5.60 percent.

For five-year, adjustable-rate mortgages, the average rate dipped to 5.56 percent from 5.58 percent.

Rates on one-year ARMs increased, however, hitting 5.15 percent, compared with 5.14 percent last week.

The mortgage rates do not include add-on fees known as points. For 30-year and 15-year mortgages, the nationwide average fee was 0.5 point. Five-year mortgages carried a 0.9 point average fee, while one-year mortgages had a 0.8 point average.

A year ago, rates on 30-year mortgages stood at 6.16 percent, 15-year mortgage rates averaged 5.90 percent, five-year ARMs were at 5.91 percent and one-year adjustables were at 5.40 percent.

AWARDS . . . Robert Gurney won the American Institute of Architects'2008 Housing Award for one- and two-family custom residences for the Wissioming residence in Glen Echo.

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