30-year, fixed-rate mortgages fall below the 6 percent level

WASHINGTON – Rates on 30-year mortgages fell sharply again this week, dropping to the lowest level in more than two years.

Freddie Mac, the mortgage company, reported Thursday that 30-year, fixed-rate mortgages averaged 5.96 percent. That was down from 6.10 percent last week and was the lowest rate since the week of Sept. 29, 2005, when they averaged 5.91 percent.

Analysts attributed the decline to worries about what the severe slump in housing and the lingering credit crunch could do to consumer confidence and the overall economy.

“With lower consumer spending and personal income gains in October, interest rates on U.S. Treasury securities fell lower this week and mortgage rates followed,” said Frank Nothaft, chief economist at Freddie Mac.

A year ago, 30-year mortgages stood at 6.11 percent.

The boom-to-bust situation has been especially hard on homeowners with spotty credit and lower incomes. Foreclosures have surged as many overstretched borrowers have been unable to make higher monthly payments once their low introductory “teaser” rates have reset to higher levels. The Bush administration on Thursday announced a plan with the mortgage industry to freeze the initial introductory rates for a period of five years for certain subprime borrowers.

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source: thenewstribune.com