30-year mortgage rate falls to 5.82%

15-year rate is 5.12%

1-year ARM is 3.79%

sales remain strong

April 20, 2003|By BLOOMBERG NEWS

U.S. mortgage rates fell last week, hovering close to record lows, which may help support the housing industry and buoy the economy during the coming months, according to Freddie Mac, the No. 2 buyer of mortgages.

The average rate on a 30-year fixed-rate mortgage decreased to 5.82 percent for the week that ended Friday from 5.85 percent the previous week.

That compares with a record-low 5.61 percent in mid-March and an average rate of 5.84 percent since the start of this year. The 30-year rate averaged 6.54 percent in 2002.

Low rates and better weather helped housing starts rebound last month, and sales are expected to remain strong for months to come as builders benefit from the availability of cheap financing.

Strong home sales may help the economy by stimulating sales of furniture and appliances.

"Housing is poised for another exceptional year," said Frank Nothaft, chief economist at Freddie Mac. "We expect starts will remain at current levels for at least the next few months. Meanwhile, we expect sales to be strong as well."

Builders broke ground at an annual rate of 1.78 million homes last month, an increase of 8.3 percent from February, the Commerce Department reported Wednesday.

The percentage gain was the biggest since September. In 2002, the industry's rate was 1.705 million new houses, the most since 1986.

The average rate on a 15-year mortgage, a popular refinancing option, fell to 5.12 percent from 5.17 percent.

The average rate on a one-year adjustable-rate mortgage slipped to 3.79 percent from 3.8 percent.

Last week's rate on a 30-year mortgage would put the average monthly payment on a $100,000 loan, including principal and interest with 1 point, at $588.03, down from $661.28 a year ago, when the rate was 6.94 percent.

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