Mortgage rates stay friendly

BY JEANNINE AVERSAASSOCIATED PRESS WRITER



WASHINGTON -- Interest rates on 30-year and 15-year mortgages dipped last week, a development that should help keep the housing market humming.

Rates on 30-year, fixed-rate mortgages averaged 5.74 percent for the week ending Nov. 18, Freddie Mac said in its weekly survey Thursday. That was down from 5.76 percent the week before.

Interest rates on 30-year mortgages hit a high this year of 6.34 percent the week of May 13. After that, rates bounced around, yet drifted lower.

"Because long-term mortgage rates are still well below the peak levels reached last May housing starts are currently exceeding expectations," said Frank Nothaft, Freddie Mac's chief economist.

From September to October, housing construction jumped 6.4 percent, to a seasonally adjusted annual rate of 2.03 million units -- the highest level of this year, the Commerce Department reported Wednesday.

"With no dramatic rise in rates on the horizon, the housing industry should continue to be healthy well into the future," Nothaft said.

For 15-year, fixed-rate mortgages, a popular option for refinancing, interest rates week averaged 5.15 percent last week, down slightly from 5.16 percent the week before. For one-year adjustable rate mortgages, rates increased a bit to 4.17 percent, compared with 4.16 percent.

Interest rates on one-year ARMs rose sharply after the Federal Reserve announced on Nov. 10 that it would boost a key short-term rate one-quarter percentage point to 2 percent.

The nationwide averages for mortgage rates do not include add-on fees known as points. Thirty-year and 15-year mortgages each carried a 0.6-point fee. One-year ARMS carried a 0.7-point fee.

Low mortgage rates have aided a housing market that's expected to set sales records for 2004.

A year ago, interest rates on 30-year mortgages averaged 6.03 percent; 15-year mortgages were at 5.39 percent and one-year ARMs were 3.76 percent.