30-year loan rate declines after 5 weeks of increases

Associated Press

July 4, 2008

WASHINGTON - Rates on 30-year mortgages, which had been rising for five straight weeks, posted a decline this week as signals from the Federal Reserve eased worries about imminent rate increases.

Freddie Mac, the mortgage company, reported yesterday that 30-year fixed-rate mortgages averaged 6.35 percent this week. That was down from 6.45 percent last week, which had been the highest level since September. The decline pushed the rate to its lowest level in three weeks, but it remained above 6 percent, where it has been since the week of May 29.

Frank Nothaft, chief economist at Freddie Mac, said financial markets were relieved with the statement from the Federal Reserve last week that eased concerns about imminent rate increases.

At its regular meeting to set interest rates on June 24-25, the central bank brought to an end an aggressive rate-cutting campaign and said that the risks of inflation had increased. However, nothing in the Fed's policy statement hinted that the central bank would start raising rates soon.