Home sales may be hurt

Friday, Sept. 14, 2001 | 9:23 a.m.

SUN WIRE REPORTS

WASHINGTON -- Mortgage rates around the country declined this week with rates on 30-year mortgages dropping to the lowest level in more than two years.

The average interest rate on 30-year fixed-rate mortgagages fell to 6.86 percent, down from 6.89 percent last week, according to the nationwide survey released Thursday by Freddie Mac, the mortgage company.

Lower mortgage rates may not lead to an increase in home sales because of heightened concern following Tuesday's terrorist attack on New York's World Trade Center and the Pentagon in Washington.

"The uncertainty brought about by Tuesday's horrific events may cause some retrenchment of consumer spending, stalling the economic recovery even further and offsetting the impact of lower mortgage rates," Freddie Mac economist Robert Van Order said.

Thursday's report marked the fifth week in a row that 30-year mortgages have been under 7 percent. This week's mark surpassed the record low for the year of 6.96 percent which had been set in March and marked the lowest level for 30-year mortgages since they averaged 6.82 percent the week of Feb. 19, 1999.

Fifteen-year mortgages, a popular option for refinancing, dipped to 6.39 percent this week, compared with 6.47 percent the previous week and the lowest level since November 1999.

A year ago, rates for 30-year mortgages averaged 7.88 percent and rates for 15-year mortgages averaged 7.60 percent.

On one-year adjustable-rate mortgages, lenders were asking an average initial rate of 5.62 percent, down from 5.64 percent the previous week. Last year at this time, ARMs stood at 7.26 percent.

These rates do not include add-on fees known as points, which averaged around 1 percent of the loan amount for all three types of mortgages.