Rates on 30-year mortgages down

WASHINGTON - Rates on 30-year mortgages, after rising for five straight weeks, edged down slightly this week as investors digested news that suggested the economic drag from housing could last longer than expected.

Mortgage giant Freddie Mac reported Thursday that 30-year, fixed-rate mortgages averaged 6.69 percent this week. That was down from 6.74 percent last week, when rates had jumped to the highest level in 11 months.

Analysts said the slight retreat occurred because financial markets saw two weak reports on housing as indications that troubles in the slumping sector are continuing to mount.

The government reported that construction of new homes and apartments fell by 2.1 percent in May, leaving building activity 24.2 percent below the level of a year ago, while the National Association of Home Builders said its index of builder sentiment in June fell to a 16-year low.

Builders have been slashing prices and offering other incentives to move a glut of unsold homes. Demand has been hurt by mounting troubles in the market for subprime mortgages, loans offered to borrowers with weak credit histories.

"Mortgage rates eased this week due to market concerns that the housing market will be a longer drag on the economy," said Frank Nothaft, Freddie Mac's chief economist.

The overall economy slowed to an anemic 0.6 percent growth rate in the first three months of this year, the weakest performance in more than four years, with housing one of the key factors depressing activity.

All mortgage rates tracked by Freddie Mac showed declines this week.

Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing, fell to 6.37 percent, down from 6.43 percent last week.

Five-year adjustable-rate mortgages averaged 6.31 percent, down from 6.37 percent while one-year adjustable mortgages fell to 5.66 percent, down from 5.75 percent last week.

The mortgage rates do not include add-on fees known as points. Thirty-year and 15-year mortgages each carried a nationwide average fee of 0.5 point. Five-year adjustable mortgages carried a fee of 0.6 point while one-year ARMs had a fee of 0.7 point.

A year ago, rates on 30-year mortgages stood at 6.71 percent, 15-year mortgages were at 6.36 percent, five-year adjustable-rate mortgages averaged 6.32 percent and one-year ARMs were at 5.75 percent.