Mortgage Rates Fall to One-month Low

The last three weeks have resulted in a consecutive decline in mortgage rates. This week's Freddie Mac survey reflected a national average for a 30-year fixed mortgage rate of 6.63 percent, down from 6.67 percent. Last year, the 30-year fixed mortgage rate averaged 6.79 percent.

This is good news for potential home loan borrowers as, just this past June, the 30-year rate was 6.74 percent. In a news release Freddie Mac Chief Economist Frank Nothaft stated, "In the statement accompanying their decision to leave the target federal funds rate unchanged, the Fed noted that core inflation had declined recently, though a 'sustained' moderation is still to be seen, and signaled that inflation risk continues to figure prominently in their policy decisions."

The inflation concerns were somewhat dissipated as the May 2007 personal consumption expenditures report showed that the measure of core price had increased by 1.9% which was within a range the Federal Reserve is at peace with.

It is too early for the mortgage brokers, mortgage lenders, and consumers to have peace of mind; the housing market is still in a slump. The home prices still have not bottomed out. The continuing home foreclosures and subprime mortgage collateral damage are still being felt throughout the economy. However, it is welcome news that mortgage rates did continue to lower. The 15-year fixed mortgage rate's national average was 6.30% for the week, a decline of 0.04 percent from last week. The 15-year fixed mortgage rate averaged 6.44 percent a year ago.

The other mortgage rates were lower as well. The once popular five-year adjustable rate mortgage's national average was 6.29 percent, a decline of .01 percent from last week. Surprisingly, the one-year adjustable-rate mortgage increased 0.06 percent to 5.71 percent from last week. All mortgage types, including mortgage refinance and home equity loans, contained a national average fee of 0.4 points.

But as mentioned above, the increasing supply of houses on the market had not made any dent in the national statistics with regards to moving inventory. The federal government data for May shows that construction of apartments had risen by 3.1 percent while single family unit construction had decreased by 3.4 percent. The housing market being an important economic leading indicator could portend of an ominous downward economic situation in the near future.

It is difficult to project the economic situation, even for the Federal Reserve. Many times the brightest economists have attempted to predict the economic outlook but somehow with so many tangible to intangible variables in existence, mathematical modeling can never account for it.

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