By CNBC.com With Reuters
Special to CNBC.com
CNBC.com
20 Mar 2008 | 11:59 AM ET
U.S. 30-year mortgage rates plunged in the latest week, home funding giant Freddie Mac said on Thursday. But if recent history is any guide, the decline may not last.
U.S. 30-year mortgage rates fell to an average of 5.87 percent from 6.13 percent a week earlier, while 15-year mortgages averaged 5.27 percent compared to 5.60 percent last week.
Short-term rates remained nearly unchanged as one-year adjustable rate mortgages (ARM) rose slightly to 5.15 percent in the week from 5.14 percent a week earlier.
Freddie Mac said the “5/1” ARM, set at a fixed rate for five years and adjustable each following year, averaged 5.56 percent, down from 5.58 percent the prior week.
“Mortgage rates fell this week as various actions were taken to improve market liquidity,” said Frank Nothaft, Freddie Mac vice president and chief economist, in a statement.
On Tuesday the Federal Reserve cut the federal funds rate by three-quarters of a percentage point to 2.25 percent.
While the Federal Reserve’s recent moves have driven mortgage rates down over the past several days, homeowners may need to act quickly to take advantage if history is any guide.
It has not been unusual to see mortgage rates slip directly after a Fed action, then rise again when new turmoil strikes the credit markets.
“The reality is that it used to be relatively easy to predict where mortgage rates were going to go. You keep your eye on things like the broader economy. More recently, it’s been almost impossible to predict,” said Mike Larson, real estate analyst for Money & Markets. “The thing that’s going to make a lasting impact on mortgage rates is whether you can get through this period of credit turmoil.”
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