April 28, 2005
There's encouraging news for consumers hoping to purchase a home. Even though prices for real estate in most areas of the country continue to climb, the cost of a mortgage is actually going down.
Rates on 30-year mortgages fell for a fourth consecutive week, amid signs the economy is not growing quite as fast as most economists projected. In its weekly survey, Freddie Mac reported that the average rate on the 30-year fixed rate mortgage is 5.78 percent, down from 5.8 percent the week before.
Not only is it the fourth straight decline, it's the lowest rate for the closely-watched average since late February.
Why the drop? Most economists say the mostly gloomy economic news of late, indicating the economy is slowing, has actually cheered up bond traders, who have been a little nervous about inflation. It's the bond market that has the most influence on long-term interest rates, which are not directly influenced by credit tightening moves by the Fed.
Analysts suggest now might be a good time to lock in a mortgage, since most predict mortgage rates will resume their climb in the months ahead. Still, by the end of the year, most say we are probably looking at a 30-year fixed-rate mortgage at 6.5 percent, still low by historical standards.
