Rates on 30-year mortgages edged down this week to their lowest point in a month, a spot of welcome news to would-be home buyers.
Freddie Mac, the mortgage company, reported Thursday that 30-year fixed-rate mortgages averaged 6.01% for the week ending May 15. That was down from last week's 6.05% and was the lowest since mid-April when rates averaged 5.88%.
Five-year adjustable-rate mortgages dropped to 5.57% from 5.67%. One-year adjustable-rate mortgages fell to 5.18%, compared with 5.29%.
But rates on 15-year fixed-rate mortgages, a popular choice for refinancing, held steady at 5.60% this week.
The drop in most types of mortgage rates reflected hope on the part of investors that a recovery could be in sight for financial markets, which have been gripped by turbulence since last summer. Earlier this week, Federal Reserve Chairman Ben Bernanke said the turmoil has eased somewhat but the situation is still dangerous.
"Recent remarks by Federal Reserve officials, which partly bolstered optimism that financial markets will recover later this year, helped mortgage rates ease up a little this week," said Frank Nothaft, Freddie Mac's chief economist. In addition, investors also took comfort in recent barometers indicating that dangerous inflation is not taking hold, another factor helping ease mortgage rates, Nothaft said.
The moderation in some mortgage rates provides a dose of good news for prospective home buyers, some of whom also may be facing a situation of harder-to-get credit. But the easing in mortgage rates doesn't change housing's overall weak picture. Sales remain mired in a slump as are home prices.
"The bottom line is that construction spending and house prices seem likely to continue to decline well into 2009," Janet Yellen, president of the Federal Reserve Bank of San Francisco, said in a speech earlier this week.
The mortgage rates do not include add-on fees known as points. The nationwide average fee for one-year adjustable-rate mortgages was 0.7 points. For 30-year and five-year adjustable-rate mortgages, the nationwide average fee was 0.6 point. And, the average fee for 15-year mortgages was 0.5 points.
A year ago, rates on 30-year mortgages stood at 6.15%, 15-year mortgage rates averaged 5.87%, five-year adjustable-rate mortgages were also at 5.89% and one-year adjustable-rate mortgages were at 5.48%.