30-Year Mortgage Rates Dip Below 6%
Rates on 30-year mortgages fell below the 6 percent level this week for the first time in three months, but economists said they don't expect rates to stay that low for long.</br></br>Freddie Mac said Thursday in its weekly nationwide survey that rates on 30-year fixed-rate mortgages averaged 5.98 percent this week, down from 6 percent last week. The rate was the lowest since late April, when 30-year rates averaged 5.94 percent.</br></br>Since peaking at a high for this year of 6.34 percent in mid- May, 30-year mortgage rates have been headed lower, reflecting in part a slowdown in economic activity in June.</br></br>The economy hit what Federal Reserve Chairman Alan Greenspan on Tuesday termed a "soft patch" in June. Greenspan, however, in delivering the Fed's mid-year economic forecast to Congress, sought to allay fears that the slowdown could threaten the sustainability of the recovery. He predicted that growth would soon rebound even as the Fed proceeds with what Greenspan indicated should be a gradual pace of rate increases.</br></br>Frank Nothaft, chief economist at Freddie Mac, said that the Fed's outlook for the second half of this year was "more upbeat than expected," and he said this stronger growth will translate into further increases in mortgage rates and other interest rates set by financial markets along with the rise in short-term rates controlled by the Fed. "However, the rise in mortgage rates will be measured, not extreme, and that will help keep the housing industry stable and affordable in the coming months," he said.