In Wake of Hurricane, Mortgage Rates May Fall Further

By: Kelly Quigley: REALTOR® Magazine Online
Long-term mortgage rates dropped this week to their lowest point since mid-July, and they may fall even further due to concerns about high energy prices and the destruction from Hurricane Katrina, Freddie Mac reports.

The 30-year fixed-rate mortgage averaged 5.71 percent for the week ending Thursday, Sept. 1, down from the previous week’s 5.77 percent. Last year at this time, the 30-year mortgage also stood at 5.77 percent.

Meanwhile, the average rate for a 15-year fixed-rate mortgage declined to 5.32 percent from 5.35 percent last week. One-year adjustable-rate mortgages edged down slightly to 4.48 percent from 4.56 percent, and five-year hybrid adjustable-rate mortgages averaged 5.30 percent this week, unchanged from last week.

"Market jitters about high energy costs and the spill over into other sectors of the economy have led to a decline in bond yields, which typically means lower mortgage rates," says Frank Nothaft, vice president and chief economist at Freddie Mac.

"As if all that wasn't enough, the devastation caused by Hurricane Katrina and the echo effects on future energy prices in the US may mean that mortgage rates will fall even further in the coming days ahead," he says.