30-year rate of 5.77% is lowest since April

Rates fall as economy signals slower growth

September 05, 2004|By BLOOMBERG NEWS

The average rate on a benchmark 30-year fixed mortgage fell to 5.77 percent in the United States last week, the lowest since early April, according to Freddie Mac. Other rates also declined.

The 30-year rate dropped from 5.82 percent a week earlier. The latest rate is the lowest since 5.52 percent during the week that ended April 2. The one-year adjustable rate dropped to 3.97 percent, the lowest in three months, from 4.05 percent, Freddie Mac said.

Mortgage rates have fallen in nine of the past 11 weeks as the economy showed signs of slower growth. Consumer confidence dropped and manufacturing waned during August, according to reports last week.

"The drop in consumer confidence left an unsavory taste in the market, creating a fear that consumer spending will slow," said Frank Nothaft, Freddie Mac's chief economist.

Consumer confidence fell from a two-year high after job growth slowed and oil prices reached a record, according to a survey released Tuesday by the New York-based Conference Board.

The National Association of Purchasing Management-Chicago said its gauge of business at Chicago-area companies declined in August, and a survey by the Institute for Supply Management showed manufacturing expanded at a slower pace during the month.

Declines in mortgage rates since June have helped sustain demand for housing. The 30-year rate averaged 5.87 percent in August, down from 6.06 percent in July and 6.29 percent in June.

A government report Wednesday showed that U.S. construction spending rose in July to a record annual rate of $997.2 billion, led by work on housing.

Freddie Mac, based in McLean, Va., is the second-biggest purchaser of U.S. mortgages. Fannie Mae is the largest.

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