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Published: November 9, 2008 3:00 a.m.

Mortgage rates fall more than quarter-point

Jeannine Aversa
Associated Press
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WASHINGTON – Mortgage rates dropped last week, providing a dose of welcome news to prospective home buyers.

Freddie Mac, the mortgage giant, reported Thursday that rates on 30-year, fixed-rate mortgages averaged 6.20 percent for the week ending Nov. 6. That was down sharply from 6.46 percent two weeks ago.

“Mortgage rates fell (last) week amid new indications of a pullback in consumer spending and a weaker jobs market,” said Frank Nothaft, Freddie Mac’s chief economist. Those factors are reducing investors’ concerns about inflation, which is helping to pull down mortgage rates.

Thirty-year mortgage rates hit a high for the year of 6.63 percent in late July, and then dropped to a seven-month low of 5.78 percent for the week ending Sept. 18.

Rates on other types of mortgages also fell last week.

For 15-year, fixed-rate mortgages, which are popular with people who are refinancing, rates dropped to 5.88 percent last week, compared with 6.19 percent the previous week.

Rates on five-year, adjustable-rate mortgages fell to 6.19 percent, down from 6.36 percent two weeks ago. And, rates on one-year, adjustable-rate mortgages decreased to 5.25 percent last week, from 5.38 percent.

The drop in rates is good news for people thinking about buying a home. But tight credit conditions are still making it difficult for some people to obtain financing.

The housing slump is a big factor weighing on the national economy. Sinking home values have made consumers feel less wealthy and less inclined to spend, forced some into foreclosure and led to big losses at financial companies.

The mortgage rates do not include add-on fees known as points. The nationwide fee for 30-year and 15-year mortgages averaged 0.7 point two weeks ago. The fee on five-year, adjustable-rate mortgages averaged 0.6 point, and the fee on one-year adjustable-rate mortgages averaged 0.4 point.

A year ago, the nationwide average rate on 30-year mortgages stood at 6.24 percent, 15-year mortgage rates averaged 5.90 percent, five-year adjustable-rate mortgages were at 5.89 percent, and one-year, adjustable-rate mortgages clocked in at 5.50 percent.