Mortgage rates dip for the third straight week

updated 2:07 p.m. ET Sept. 4, 2008

WASHINGTON - Rates on 30-year mortgages fell for a third straight week, dropping to the lowest level since mid-July.

Freddie Mac, the mortgage company, reported Thursday that 30-year, fixed-rate mortgages dipped to 6.35 percent this week, down from 6.40 percent, the previous week. It marked the third consecutive decline and left rates at the lowest level since July 17 when they stood at 6.26 percent.

The 30-year mortgage, which hit a high for this year at 6.63 percent on July 24, has been above 6 percent since late May as financial markets have become convinced that rising inflation pressures will keep the Federal Reserve from cutting interest rates further to bolster the weak economy.

Frank Nothaft, chief economist for Freddie Mac, attributed this week’s decline in mortgage rates to recent reports indicating that consumer spending may slow further now that the boost from the economic stimulus payments is fading.

Nothaft noted that personal incomes, the fuel needed to support consumer spending, dipped by 0.7 percent in July, the worst showing in three years and a worrisome signal that spending could falter in the months ahead.

The Freddie Mac survey showed other mortgage rates also declined this week.

Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing, fell to 5.90 percent, down from 5.93 percent last week.

Rates on five-year, adjustable-rate mortgages averaged 5.97 percent this week, down from 6.03 percent last week.

One-year, adjustable-rate mortgages dropped to 5.15 percent, down from 5.33 percent last week.

The mortgage rates do not include add-on fees known as points. The nationwide fee for 30-year mortgages averaged 0.7 point last week. The nationwide fee for all other mortgage types averaged 0.6 point this week.

A year ago, rates on 30-year mortgages stood at 6.46 percent, 15-year mortgage rates averaged 6.15 percent, five-year adjustable-rate mortgages were at 6.32 percent and one-year adjustable-rate mortgages stood at 5.74 percent.

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