Industry News

Mortgage Rates Slipped As Markets Awaited Fed Chairman Testimony This Week

February 12, 2004

Housing to Continue to Support the Economy in 2004

McLean, VA ? In Freddie Mac's Primary Mortgage Market Survey, the 30-year fixed-rate mortgage (FRM) averaged 5.66 percent, with an average 0.7 point, for the week ending February 12, 2004, down from 5.72 percent last week. Last year at this time, the 30-year FRM averaged 5.86 percent.

The average for the 15-year FRM this week is 4.96 percent, with an average 0.7 point, down from last week's average of 5.03 percent. A year ago, the 15-year FRM averaged 5.26 percent.

One-year Treasury-indexed adjustable-rate mortgages (ARMs) averaged 3.57 percent this week, with an average 0.7 point, down from 3.61 percent last week. At this time last year, the one-year ARM averaged 3.89 percent.

"Markets remained tame while waiting for Federal Reserve Board Chairman Alan Greenspan's semi-annual testimony to House members about the state of the economy," said Frank Nothaft, Freddie Mac chief economist. "Greenspan led the markets to believe that the Fed's actions would be on hold until there was more than sufficient growth in the economy to warrant a change in monetary policy. In other words, there is still enough slack in the economy to leave rates at their current accommodative level for some months to come.

"As a result, mortgage rates not only experienced no upward pressure this week, rates even eased slightly. And since we don't see mortgage rates rising to more than about 6.25 percent at best this year we expect housing will continue to contribute significantly to consumer spending, which is the largest element of the national economy."