ICS Magazine

U.S. 30-, 15-year mortgage rates at new record low

November 14, 2002
WASHINGTON, Nov 14 (Reuters) - Averages on U.S. 30- and 15-year fixed-rate mortgages fell to new record lows in the week ending Nov. 14 following a recent sharp interest rate cut by the Federal Reserve and testimony from its chairman, Freddie Mac said on Thursday.

Thirty-year mortgage rates fell below 6 percent to a record-low average of 5.94 percent from 6.11 percent last week, while 15-year mortgages dipped to a record low average of 5.32 percent from 5.48 percent, it said. One-year adjustable rate mortgages also fell to a new record average of 4.09 percent from 4.15 percent.

Thirty-year rates had not been under 6 percent since the Oct. 11 week when they averaged 5.98 percent.

A year ago, 30-year mortgages averaged 6.51 percent, 15-year mortgages 5.98 percent and the ARM 5.06 percent.

"The Fed rate cut and (Chairman Alan) Greenspan's recent remarks that the economy has hit a 'soft spot' had a huge impact on financial markets," said Frank Nothaft, Freddie Mac chief economist, in a statement. "Combined with the anticipation that the U.S. could soon be at war with Iraq, market sentiment turned toward the negative, driving mortgage rates to new lows again."

"The upcoming Consumer Price Index report will give us the news about inflation and that will give some insight on the direction of future mortgage rates, but at this point we don't foresee any dramatic movement in rates one way or the other," Nothaft said.

Next week the Labor Department will issue U.S. October consumer prices. The Commerce Department also will release U.S. housing starts for that month.