[Dubya]

Average Mortgage Rate Hits Record Low

(December 27) -- The national average commitment rate on a 30-year fixed-rate mortgage was 5.93 percent, with an average 0.6 point, for the week ending December 27, 2002, Freddie Mac says. That is down from 6.03 percent last week. Last year at this time, the 30-year FRM averaged 7.16 percent. The 30-year FRM has not been this low since 1965.

The average for the 15-year FRM this week is 5.32 percent, with an average 0.6 point, down from last week's average of 5.42 percent. A year ago, the 15-year FRM averaged 6.65 percent. The 15-year FRM meets the lowest level ever recorded in Freddie Mac's weekly survey in November 2002.
One-year Treasury-indexed adjustable-rate mortgages (ARMs) averaged 4.01 percent this week, with an average 0.6 point, slipping from last week's average of 4.07 percent. At the same time last year, the one-year ARM averaged 5.25 percent. The 1-year ARM this week fell to the lowest level recorded since Freddie Mac started tracking it in 1984.

"2002 was an amazing year for the housing sector. The annual average for the 30-year fixed-rate mortgage rate this year was about 6.5 percent, the lowest annual average in more than 31 years," said Frank Nothaft, Freddie Mac chief economist. "That was the primary factor that led to an incredible amount of home building, home sales and refinancing, all of which helped keep the economy from another recession.
"The outlook for the future is rosy as we start out the new year with mortgage rates at or below 6 percent across the nation."

Source: Freddie Mac (12/27/02)

[Dubya]

2003 Outlook: Housing Down, Economy Up

(December 27) -- Consumer spending, tax cuts, and low short-term finance rates could trigger improved economic growth next year, but the housing and mortgage lending businesses that have propped up the economy thus far will lose some of their shine, says David Berson, Fannie Mae chief economist.

Homebuilding, property sales, and mortgage originations will decline in 2003 as the interest rate on 30-year mortgage financing bumps up from just under 6 percent to just below 6.5 percent by the end of next year, Berson predicts.

Housing starts will also decline from an expected 1.69 million units in 2002 down to 1.64 million units in 2003.

Berson forecasts new-home sales to fall from an expected record 963,000 units this year to 944,000 next year, with resales slipping from 5.54 million--also an expected record--to 5.48 million.

Look for new mortgages to hit $2.04 trillion next year, down from a record $2.52 trillion this year.

Source: New York Newsday (12/27/02)