30-year mortgages sink to lowest point since late May

WASHINGTON - Rates on 30-year mortgages sank this week to their lowest point since late May, providing a little ray of sunlight for would-be home buyers.

Freddie Mac, the mortgage company, reported Thursday that 30-year, fixed-rate mortgages averaged 6.52 percent. That was down from 6.62 percent last week and was the lowest rate since the week ending May 31, when rates stood at 6.42 percent.

The moderation provides a dose of welcome news for prospective homebuyers, some of whom also may be facing a situation of harder-to-get credit. In mid-June, rates on 30-year mortgages climbed to 6.74 percent, the high for this year.

Other mortgage rates also went down.

Rates on 15-year fixed-rate mortgages, a popular choice for refinancing, averaged 6.18 percent, down from 6.30 percent last week.

For five-year adjustable-rate mortgages, rates dipped to 6.34 percent, from 6.35 percent last week. Rates on one-year adjustable-rate mortgages fell to 5.60 percent, compared with 5.67 percent last week.

Mortgage rates eased following last week's decision by the Federal Reserve to slice its lending rate to banks, a move designed to calm recent turmoil on Wall Street about a spreading credit crunch.

"Interest rates on conforming long-term fixed rate mortgages and one-year adjustable-rate mortgages trended down by about one-tenth of a percent in the past week," said Frank Nothaft, Freddie Mac's chief economist. "This is as a result of yields on Treasury securities coming down, and the Fed's decision to cut the discount rate," he explained.

The mortgage rates do not include add-on fees known as points. Thirty-year mortgages carried a nationwide average fee of 0.4 point. Fifteen-year mortgages had a fee of 0.5 point. Five-year and one-year ARMs each carried an average fee of 0.6 point.

A year ago, rates on 30-year mortgages stood at 6.48 percent, 15-year mortgages were at 6.18 percent, five-year ARMS averaged 6.14 percent and one-year ARMs were at 5.60 percent.

After a five-year boom, the housing market went bust last year. Sales turned weak as did home prices. The slump has gotten worse this year as lenders have made it more difficult for some people to obtain mortgages. Lenders have tightened standards amid soaring foreclosures and late payments by subprime borrowers - those with blemished credit histories. Problems have spread, affecting more creditworthy borrowers.

Against this backdrop, Wall Street investors have been gripped by fears that the credit crisis will turn into an economic crisis. Stocks have careened wildly in recent weeks. The Fed has taken a number of steps aimed at stabilizing the situation.


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