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Mortgage Rates Ease After Increases
By JEANNINE AVERSA
WASHINGTON (AP) - Mortgage rates _ after rising for two consecutive weeks _ dipped this week, offering a break for people wanting to buy a home.
The average rate on 30-year mortgages fell to 5.66 percent, down up from 5.72 percent last week, Freddie Mac, the mortgage giant, said Thursday in its weekly nationwide survey of mortgage rates.
Rates on these benchmark mortgages hit a four-decade low of 5.21 percent in the middle of June.
For 15-year mortgages, a popular option for refinancing, rates declined to 4.96 percent this week, down from 5.03 percent last week. Rates for one-year adjustable mortgages decreased to 3.57 percent compared to 3.61 percent last week.
A year ago, rates on 30-year mortgages averaged 5.86 percent, 15-year mortgages were 5.26 percent and one-year adjustable mortgages stood at 3.89 percent.
The nationwide averages for mortgage rates do not include add-on fees known as points. Each loan type carried an average fee of 0.7 point this week.
This week's decline in mortgage rates was influenced by Wall Street investors' belief that Federal Reserve Chairman Alan Greenspan and his colleagues will be in no hurry to raise short-term interest rates this year.
Greenspan, who delivered a report on the economy to Congress this week, "led the markets to believe that the Fed's action would be on hold until there was more than sufficient growth in the economy to warrant a change in monetary policy," said Frank Nothaft, Freddie Mac's chief economist. "As a result, mortgage rates not only experienced no upward pressure this week, rates even eased slightly."
Home sales reached record high levels in 2003 powered by low mortgage rates that proved too good for buyers to pass up. Sales of both previously owned homes and new ones should have their second best year ever in 2004 _ even with an expected rise in mortgage rates, predicted David Lereah, chief economist at the National Association of Realtors.
Lereah believes rates on 30-year mortgages will move modestly higher this year _ to around 6.5 percent in the fourth quarter.
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