Washington, DC, Jan. 10--Rates on 30 year mortgages edged up this week after dropping to a new low last week. But rates are still sufficiently low to be attractive to house hunters thinking about buying a home and people mulling refinancing the home that they do own, economists said.
The average interest rate on a 30 year, fixed rate mortgage rose to 5.95% for the week ending January 10, up from 5.85% the week before, according to Freddie Mac's weekly nationwide survey of rates.
Last week's rate was the lowest since the mortgage giant began tracking 30 year mortgage rates in 1971. Records that reach back earlier than Freddie Mac's put last week's 30 year mortgage rate at the lowest level since the early 60s.
Rates on 15 year fixed rate mortgages, a popular option or refinancing, also went up this week to 5.33%, compared with 5.24% in the prior week.
However, for one year adjustable rate mortgages, rates dipped to 4.03%, down from 4.06% the previous week.
Low mortgage rates over the past year have been fueling not only strong home sales but a surge of home mortgage refinancing activity. The extra monthly cash consumers are saving by refinancing their mortgages at lower interest rates is helping to support consumer spending, which has been the main force keeping the economy going.
"Nearly 25% of all outstanding mortgages were refinanced in 2002, saving those homeowners an average $1,200 per year to spend or save as they saw fit," said Frank Nothaft, Freddie Mac's chief economist. "With interest rates as low as they currently are, refinancing will continue to be a viable option for some."
The Mortgage Bankers Association of America said that total home mortgage applications jumped by 24.3% for the week ending January 3, getting the housing industry off to a good start in 2003. Refinancing activity accounted for 77.8% of total applications, up from 75.9%, the week before.
"The refinance boom that began in the first week of 2001 is still going strong in 2003," said the association's economist Phil Colling. "Many homeowners who had been waiting for lower rates to refinance were most likely spurred to action."
