February 5, 2009

Bottom line improves in housing market

Interest rates for 30-year, fixed-rate U.S. mortgages rose modestly in the week ending Feb. 5, the Federal Home Loan Mortgage Corp. said Thursday.

The 30-year, fixed-rate mortgage averaged 5.25 percent with an average 0.8 points in the week, up from the previous week, when interest rates were 5.1 percent. A year ago, interest rates for 30-year fixed-rate mortgages were 5.67 percent.

At 4.92 percent with an average 0.8 points, the 15-year, fixed-rate average also rose. Last week, interest rates for 15-year mortgages averaged 4.8 percent. A year ago, they averaged 5.15 percent.

Interest rates rose amid economic reports that were somewhat better than consensus forecasts had anticipated, said Frank Nothaft, Freddie Mac vice president and chief economist.

The economy slowed by 3.8 percent in the fourth quarter of 2008, less than the market consensus, with inflationary pressures held at bay, Nothaft said. Meanwhile, personal incomes fell by only half as much as some market forecasters predicted.

The bottom line is that low mortgage rates and falling house prices have made housing the most affordable in 19 years, he said.