30-year mortgages at 14-month low

WASHINGTON -- Rates on 30-year mortgages fell again this week, dropping to the lowest point since the spring of 2004, according to a nationwide survey.

The mortgage company Freddie Mac said Thursday its weekly survey showed that rates on 30-year, fixed-rate mortgages averaged 5.56 percent, compared with 5.62 percent last week.

The ninth decline in the past 10 weeks pushed sent rates to the lowest level since they averaged 5.52 percent the week of April 1, 2004.

The steady decline over the past two months helped sales of new and existing homes set records in April.

Analysts predicted further strong sales in May.

The most recent drop in rates was attributed to the weaker-than-expected jobs report last week. It showed that businesses added just 78,000 workers to their payrolls, the poorest showing in nearly two years.

"The May employment report came in at less than half of what was expected last month, which pushed bond yields -- and mortgage rates -- down further," said Frank Nothaft, chief economist at Freddie Mac.

Nothaft said the continued declines in mortgage rates had caused him to lower his forecast for where rates will be at year's end. He said he expected 30-year mortgages to end up at between 5.9 percent and 6.2 percent, compared with his earlier prediction of 6.5 percent.

The nationwide averages for mortgage rates do not include add-on fees known as points. The 30-year mortgage carried a nationwide average fee of 0.6 point; the 15- and five-year mortgages both had fees of 0.5 point; the one-year ARM had an average fee of 0.7 point.

A year ago, 30-year mortgages averaged 6.28 percent, 15-year mortgages were at 5.67 percent and one-year ARMs averaged 4.14 percent. Freddie Mac does not have historical data on the five-year ARM which it began tracking this year.