WASHINGTON – Rates on 30-year mortgages declined this week for the first time in five weeks amid expectations that the Federal Reserve won't push interest rates much higher.
Mortgage finance company Freddie Mac (FRE) reported Thursday that rates on 30-year, fixed-rate mortgages slipped to a nationwide average of 6.74 percent this week from 6.79 percent last week.
Housing sales, which have set records for five straight years, are expected to decline by around 7 percent this year as higher mortgage rates make home ownership more expensive.
Frank Nothaft, chief economist at Freddie Mac, expects only a gradual rise in mortgage rates this year so long as the Federal Reserve does not become overly worried about inflation.
The financial market's expectation of only one additional interest-rate hike by the Fed this year has helped soften the upward pressure on long-term rates, according to Nothaft.
"This should keep mortgage rates relatively stable for the foreseeable future," he said.
Rates also declined for other types of mortgages this week, according to the Freddie Mac survey.
Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing, fell to an average 6.37 percent from 6.44 percent last week.
Rates on one-year adjustable rate mortgages slipped to 5.75 percent from 5.83 percent last week.
Rates on five-year adjustable-rate mortgages declined to 6.33 percent from 6.39 percent last week.
The mortgages rates do not include add-on fees known as points. The 30-year mortgages carried a nationwide average fee of 0.6 point this week, while the average fee for 15-year mortgages was 0.4 point. The five-year ARM had an average fee of 0.5 point and the one-year ARM carried a fee of 0.6 point.
A year ago, 30-year mortgages averaged 5.66 percent, 15-year mortgages stood at 5.25 percent, one-year ARMs were at 4.39 percent and five-year ARMs averaged 5.15 percent.