30-year falls to 31 year low
By CHRISTY ROBINSON
12/27/2002

Mortgage rates took a small dip Christmas week, but it was enough of a plunge to take them lower than they've been since 1965, according to Freddie Mac's weekly mortgage market survey.

Freddie found the average 30-year fixed-rate mortgage to be 5.93% for the week ending Dec. 27 -- down a bit from last week's 6.03%, and way down from last year's 7.16%.

The annual average for the 30-year for 2002 was about 6.5%, the lowest annual average in more than 31 years, said Frank Nothaft, chief economist at Freddie.

“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," he said.

Nationally, the 30-year was highest this week in the North Central states at 6.01%, and lowest in the Western states at 5.83%.

The average 15-year this week was 5.32% -- also at its lowest since Freddie began tracking it in 1965. It's down slightly from last week’s 5.42%. Last year at this time, the 15-year averaged 6.65%.

The one-year Treasury-indexed adjustable-rate mortgage (ARM) also dropped to a record low. It averaged 4.01% this week, the lowest since Freddie began tracking it in 1984. Last week's average was 4.07%, and at the same time last year, the one-year ARM averaged 5.25%.

Applications for mortgages slowed during the week approaching the holidays.

The Mortgage Bankers Association of America's (MBA) index of mortgage loan applications came in at 908.3 for the week ending Dec. 20, a 7.8% decrease from the prior week's 985.5.

The seasonally adjusted number, which is reported a week behind Freddie's rate survey, is an almost 70% increase from last year's index of 535.2, however.

Refinancing represented 72.5% of total applications, the MBA said, with refi activity representing 73% the previous week.

Bankrate.com's weekly survey, which asks mortgage experts to gauge rate activity over the next 30 to 45 days, revealed that we may be in for more of the same lows.

The majority of experts -- 58% -- said rates will stay the same, within 2 bps. The other 42% was split between experts who said rates will go down (25%) and those who said rates will go up (17%).

"Persistent economic concerns and the absence of inflation will sustain current rates through mid-January," said Neil Cribb, president of Mortgage Financial Network in Safety Harbor, Fla.

Freddie's Nothaft is even more enthusiastic about next year's rates.

"The outlook for the future is rosy as we start out the new year with mortgage rates at or below 6% across the nation."

At Friday afternoon, the 10-year Treasury note's yield fell 0.04% from yesterday's close to 3.86%, with the price rising $0.34375 to 101 4/32.

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