Kings Hollow Builders

30-year rates hit lowest level since summer '05
Dallas Morning News/The Associated Press

They should stay near 6 percent unless recession starts, analysts say

WASHINGTON - Rates on 30-year mortgages dropped for a third consecutive week to the lowest level since the summer of 2005 as worries intensified about the current economic slowdown.

Freddie Mac, the mortgage company, reported Thursday that 30-year mortgages have been below 6 percent and the third consecutive deadline since rates closed 2007 at 6.17 percent. This week's average was the lowest since 30-year mortgages were at 5.66 percent the week of July 14, 2005.

Analysts attributed the decline to weak economic statistics, which have increased worries that the country could be in danger of tipping into a recession.

Many economists don't' believe mortgage rates will decline much more, however, even with a pledge last week by Federal Reserve Chairman Ben Bernanke that the central ban will cut interest rates further if needed to keep the country out of a recession.

Analysts said Mr. Bernanke's comments did not greatly alter the expectations of investors who have already built rate declines into what they are willing to pay for treasury's 10-year bond, a key benchmark for long-term interest rates. Many said they believe the 30-year bond, a key benchmark for long-term interest rates. Many said they believe the 30-year mortgage will move in a narrow range around 6 percent unless the economy does go into a full-blown recession. If that occurs, they said, rates would fall.

Rates on 15-year mortgages, a popular choice for refinancing dropped to 5.21 percent this week down from 5.43 percent last week

Rates on five-year mortgages declined to 5.40 percent, down from 5.37 percent last week.

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