Posted on 11/20/2003 4:41:03 PM PST by ClintonBeGone
WASHINGTON (Reuters) - Interest rates on U.S. 30-year fixed rate mortgages plunged in the latest week after key Federal Reserve officials said inflation would not be a major factor for the economy in the near term, Freddie Mac said on Thursday.
Freddie Mac, the No. 2 U.S. home mortgage financier, said interest rates on a 30-year fixed-rate mortgage, the most popular U.S. home loan, dropped to an average of 5.83 percent in the week ending Nov. 21 from 6.03 percent the previous week.
Fifteen-year mortgage rates also fell to an average of 5.17 percent from 5.39 percent last week, while one-year adjustable rate mortgages dipped to an average of 3.72 percent from 3.76 percent last week.
A year ago, 30-year mortgage rates averaged 6.03 percent, 15-year mortgage rates were at 5.44 percent and the ARM averaged 4.14 percent, according to Freddie Mac. The company, chartered by Congress but publicly traded, buys mortgages from lenders and packages them into securities for investors or holds them in its own portfolio.
"Over the past week, several high-ranking Federal Reserve officials gave speeches indicating that inflation remains a nonevent," said Frank Nothaft, Freddie Mac chief economist. "The bond market rallied and this caused mortgage rates to fall."
In the most recent announcement, Chicago Fed President Michael Moskow said on Thursday that even with strong economic growth next year, inflation is unlikely to pick up significantly, suggesting Fed policy can remain accommodative.
"Even though growth last quarter was exceptionally strong, we are still likely quite a ways from seeing the kinds of pressure on labor and capital resources that often signal an increase in inflation," Moskow told the Chicagoland Chamber of Commerce (news - web sites).
Home mortgage interest rates have moved in a tight range near 6 percent in recent months after posting record lows last summer. But limited inventories and historic low rates continue to draw existing homeowners to refinance and entice prospective new buyers to take the plunge and purchase their own home.
The Fed has pledged to keep the agency's benchmark federal funds rate at 1 percent, the lowest level since 1958 for some time.
Freddie Mac said lenders charged an average of 0.6 percent in fees and points on 30-year mortgages and 0.7 percent on the ARM in the week ending Nov. 21, both unchanged from last week. Lenders charged 0.7 percent in fees and points on 15-year mortgages in the latest week, up from 0.6 percent a week ago.
BLISTERING HOME-BUILDING PACE
As investors expect long-term interest rates to remain relatively low, mortgage rates have followed, making it less costly for consumers to borrow money to finance their homes.
Builders broke ground for new U.S. single-family homes and applied for permits to build them at record high paces in October, led by low mortgage rates, the Commerce Department (news - web sites) said on Wednesday.
Total U.S. housing starts -- consisting of single- and multi-family homes -- jumped 2.9 percent to a seasonally adjusted annual rate of 1.960 million units in October from an upwardly revised 1.905 million pace in September, hitting the highest pace since January 1986.
Permits to build single-family homes rose 3.2 percent to 1.535 million units -- the highest on record.
The Mortgage Bankers Association said applications for U.S. home loans rose last week as new requests for loans to buy homes picked up.
We're talking two closings versus one. Are your closing costs that much cheaper where you could do 2 and still beat the cost of 1? I know there are a lot of variables, but could you be in the ball park?
Every time any of my Dem contacts moan and groan about the economy, all I have to do is to remind them of the double-digit inflation, interest rates and unemployment of the Jimmy Carter years!
LOL you're cruel cruel cruel. I love it!
Thanks! Poohbah is my hero :)
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