Mortgage Rates Drop to Lowest Level Since March

Rates on 30-year mortgages edged down this week to a seven-month low.

Mortgage-giant Freddie Mac (FRE) reported Thursday that 30-year, fixed-rate mortgages fell to 6.30 percent, down slightly from 6.31 percent last week. It put rates at the lowest level since they were at 6.24 percent the first week of March.

Rates have been headed lower for more than two months as financial markets have become convinced that a slowing economy will help ease inflation pressures and that will keep the Federal Reserve from raising interest rates further.

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The drop in mortgages has spurred a rebound in mortgage applications, driven in part by homeowners with adjustable rate mortgages who want to refinance to a fixed rate before their current mortgages reset to a higher monthly payment.

"Home refinancing rose 18 percent last week, accounting for almost half of all mortgage applications," said Frank Nothaft, chief economist at Freddie Mac.

Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing, averaged 5.98 percent last week, the same as the previous week. That is the lowest rate for this type of mortgage since March 23.

Rates on one-year adjustable rate mortgages dipped to 5.46 percent, down from 5.47 percent last week.

Rates on five-year adjustable-rate mortgages were unchanged at 6.00 percent.

The mortgage rates do not include add-on fees known as points. For a 30-year mortgage, the nationwide average fee was 0.3 point while the 15-year mortgage carried a fee of 0.4 point. The one-year ARM had a nationwide average fee of 0.7 point and the five-year ARM carried a fee of 0.5 point.

A year ago, 30-year mortgages averaged 5.98 percent, 15-year mortgages stood at 5.54 percent, one-year ARMs were at 4.77 percent and the five-year ARMs were at 5.48 percent.

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