Rates on 30-year mortgages fell again this week, dropping to the lowest point since spring 2004, according to a nationwide survey.
Rates on 30-year fixed-rate mortgages averaged 5.56 percent, down from 5.62 percent last week, Freddie Mac said Thursday. It marked the ninth decline in the past 10 weeks and dropped rates to the lowest level since they averaged 5.52 percent the week of April 1, 2004.
The steady fall helped spur sales of both new and existing homes to record levels in April and analysts predicted that May figures will show continued strength. The most recent drop in rates was attributed to the jobs report last week, which showed businesses added just 78,000 workers to their payrolls.
"The May employment report came in at less than half of what was expected last month, which pushed bond yields -- and mortgage rates -- down further," said Frank Nothaft, chief economist at Freddie Mac.
Nothaft said the continued rate declines had prompted him to revise down his forecast for where rates will be at the end of the year. He said he expects 30-year mortgages to finish the year between 5.9 percent and 6.2 percent, down from the 6.5 percent he had expected earlier.
In congressional testimony, Federal Reserve Chairman Alan Greenspan said Thursday that low mortgage rates were contributing to some "froth" in local markets, but he said he did not believe there was a national housing bubble. Greenspan said he was concerned about the dramatic increase in interest-only mortgages and the introduction of relatively exotic forms of adjustable-rate mortgages.
For 15-year fixed-rate mortgages, a popular option for refinancing, rates dipped to 5.14 percent this week, from 5.2 percent last week. Rates on one-year adjustable-rate mortgages fell to 4.21 percent after rising slightly to 4.26 percent.
For five-year hybrid adjustable-rate mortgages, rates fell to 5.01 percent, from 5.1 percent last week. These hybrids have a fixed rate for five years and then adjust yearly.
The nationwide averages for mortgage rates do not include add-on fees known as points. The 30-year mortgage carried a nationwide average fee of 0.6 point while the 15- and five-year mortgages both had fees of 0.5 point and the one-year ARM had an average fee of 0.7 point.
A year ago, 30-year mortgages averaged 6.3 percent, 15-year mortgages were at 5.67 percent and one-year ARMs averaged 4.14 percent. Freddie Mac does not have historical data on the five-year ARM, which it began tracking this year.
EVENTS . . . Prince George's County Executive Jack B. Johnson is scheduled to speak June 16 at the Property Management Association's general-membership meeting. Johnson is expected to discuss his position regarding the county exercising its powers of eminent domain pending increased security measures at crime-ridden properties. The event is at 6 p.m. event at the Greenbelt Marriott, 6400 Ivy Lane in Greenbelt, and admission is $90. To register, call 301-657-9200; Web site: www.pma-dc.org.
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