Frank Nothaft, chief economist at Freddie Mac, said that because mortgage rates have dropped by more than a quarter-point in the past two weeks, there has been an increase in the number of people refinancing mortgages to more attractive rates, a development which should help spur the economy going forward.
Housing, which had enjoyed a five-year boom of soaring prices and record sales, has been in a severe slump, which economists predicted will continue into 2008 and perhaps 2009.
Other types of mortgages also showed declines this week.
Rates on 15-year mortgages, a popular choice for refinancing, dropped to 5.43 percent this week, down from 5.68 percent last week. Rates on five-year adjustable-rate mortgages declined to 5.63 percent, compared to 5.78 percent last week. Rates on one-year ARMs fell to 5.37 percent, down from 5.47 percent last week.
The mortgage rates do not include add-on fees known as points. Thirty-year, 15-year and one-year mortgages each carried a nationwide average fee of 0.4 point. Five-year mortgages had a fee of 0.5 point.
A year ago, 30-year mortgages stood at 6.21 percent. Rates on 15-year mortgages were at 5.96 percent, while five-year adjustable-rate mortgages averaged 6.03 percent and one-year ARMs were at 5.44 percent.