Rise in Mortgage Rates Stemmed

McLEAN, Va. – The four-week-long rise in mortgage rates was halted this week, if even for a brief time, as investors digested news that economic drag could last longer than expected. The average for the 30-year, fixed-rate loan dipped to 6.69% this week, from a one-year high of 6.74% last week; while the average for the 15-year, fixed-rate mortgage dipped to 6.37%, from 6.43%, according to Freddie Mac. ARM rates also moved lower, with the average for the five-year ARM dipping to 6.31% this week, from 6.37% last week; and the average for the one-year ARM declining to 5.66%, from 5.75%. Analysts said the slight retreat occurred because financial markets saw two weak reports on housing as indications that troubles in the slumping sector are continuing to mount. The government reported that construction of new homes and apartments fell by 2.1% in May, leaving building activity 24.2% below the level of a year ago, while the National Association of Home Builders said its index of builder sentiment in June fell to a 16-year low. Mortgage rates eased this week due to market concerns that the housing market will be a longer drag on the economy, said Frank Nothaft, Freddie Mac's chief economist.