30-Year Rate Declines to 5.85%

Rates on 30-year mortgages edged down this week, though rates on other types of mortgages rose.

Freddie Mac reported Thursday that 30-year, fixed-rate mortgages averaged 5.85 percent this week. That was down slightly from 5.87 percent last week and marked the second consecutive week that rates have been below 6 percent.

Rates on 30-year mortgages 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. But then rates began rising as bond investors became worried about increased inflation, hitting a high for this year of 6.24 percent the week of Feb. 28.

The meltdown of Bear Stearns, the nation's fifth-largest investment bank, prompted the Federal Reserve to move aggressively to pump money into the financial system and cut a key lending rate by three-quarters of a percentage point on March 18.

Analysts said all of these Fed efforts helped to ease pressure on interest rates that had been generated by the higher inflation readings. Further weak readings on the economy also contributed, with the Index of Leading Economic Indicators falling for a fifth straight month and consumer confidence dropping to a five-year low.

"Long-term mortgage rates were mixed but relatively unchanged in the past week as the latest economic indicators came in much as expected," said Frank E. Nothaft, chief economist at Freddie Mac.

Outside of 30-year mortgages, rates on other mortgage categories posted slight increases.

The average rate on 15-year, fixed-rate mortgages, a popular choice for refinancing, rose to 5.34 percent from 5.27 percent.

For five-year, adjustable-rate mortgages, rates rose to 5.67 percent from 5.56 percent.

Rates on one-year ARMs increased to 5.24 percent from 5.15 percent.

The mortgage rates do not include add-on fees known as points. For 30-year and 15-year mortgages, the nationwide average fee was 0.4 point. Five-year mortgages carried a 0.6 point average fee while one-year mortgages had a 0.5-point average.

A year ago, rates on 30-year mortgages stood at 6.16 percent, 15-year mortgage rates averaged 5.86 percent, five-year adjustable-rate mortgages were 5.88 percent, and one-year adjustables were at 5.43 percent.

Housing has been suffering through a severe slump that has dragged down house prices in many parts of the country. The fallout is hitting both homeowners and the economy at large, raising worries about a possible recession.