WASHINGTON – Average U.S. interest rates on 30-year mortgages were unchanged in the latest week, but mortgage finance company Freddie Mac (FRE) said Thursday that housing growth could slow in the near-term as the impact of Hurricane Katrina (search) ripples throughout the industry.
U.S. 30-year mortgage rates averaged 5.71 percent in the week ended Sept. 8, unchanged from a week earlier, according to Freddie Mac. Fifteen-year mortgages averaged 5.30 percent, down slightly from 5.32 percent last week.
One-year adjustable rate mortgages (search) (ARMs) also fell to an average of 4.45 percent from 4.48 percent.
"We expect that near-term growth will now be a bit weaker than had been anticipated, due in very large part to the disruption in economic activity brought on by Katrina last week," Frank Nothaft, vice president and chief economist at Freddie Mac, said in a statement.
"However, the federal monies that will flow into the damaged areas and the lower interest rates brought on by the disaster will stimulate economic growth next year, making up for the slowdown in the last part of this year," he said.
Nothaft said reconstruction demand in areas damaged by the hurricane will increase the costs for construction materials and could add two to three percent to the cost of a home. Still, the added costs will likely be balanced out by lower mortgage rates.
The damage from Hurricane Katrina could include up to 400,000 lost jobs and slower U.S. growth in the near-term, a congressional report said on Wednesday. The announcement came on the same day President Bush sought $51.8 billion in fresh aid for the disaster zone.
Douglas Holtz-Eakin, director of the Congressional Budget Office (search), said the economic impact seems likely to be "significant but not overwhelming" and could slow economic growth in the second half of the year by one-half to 1 percentage point.
A year ago, 30-year mortgage rates averaged 5.83 percent, 15-year mortgages 5.22 percent and the ARM 4.00 percent.
Freddie Mac said lenders charged an average of 0.6 percent in fees and points on 30-year mortgages and 0.7 percent on the ARM, both unchanged from a week ago. The rate on 15-year mortgages rose to 0.6 percent from 0.5 one week ago.
The hybrid "5/1" ARM, set at a fixed rate for five years, then adjustable each year following, fell to 5.24 percent from 5.30 percent, Freddie Mac said.
Freddie Mac is a mortgage finance company chartered by Congress that buys mortgages from lenders and packages them into securities to sell to investors or to hold in its own portfolio.