Average Rates On Florida Home Loans Decline

Rates on 30-year Florida home loans declined this week for the first time in five weeks, amid expectations that the U.S. central bank won’t elevate interest rates much higher.

In its weekly survey of lenders, mortgage finance giant Freddie Mac said Thursday that the rates on 30-year, fixed-rate mortgages slipped to 6.74 percent this week on average, down from 6.79 percent last week.

Housing sales, which have set new records for five consecutive years, are expected to decline by around 7 percent in 2006 as higher mortgage rates and shockingly high home prices in many areas are making home ownership more expensive.

The chief economist at Freddie Mac, Frank Nothaft, expects only a gradual rise in mortgage rates this year, as long as the Federal Reserve does not become overly worried about inflation. The Fed has bumped up the nation’s prime rates at 17 consecutive meetings, a series of hikes that correlates to Florida home loan rates — and applications — closely.

But markets are speculating that only one more hike by the Fed this year will take place, helping minimize the upward pressure on long-term rates.

“This should keep mortgage rates relatively stable for the foreseeable future,” Nothaft said.

Rates also declined for other types of mortgages this week, according to Freddie Mac, which predicts a soft landing for the nation’s housing market in 2006. Borrowing costs on 15-year, fixed-rate home loans, a popular choice for refinancing, fell to an average of 6.37 percent from 6.44 percent a week ago. Meanwhile, one-year adjustable-rate mortgages dropped to 5.75 percent from 5.83 percent, and five-year adjustable-rate loans declined to 6.33 percent from 6.39 percent.

The mortgage rates reported here do not include points, which can be used to buy down the rate of the Florida home loan and averaged 0.6 this week for 30-year, fixed-rate mortgages. The average for 15-year loans was 0.4 points, while the five-year adjustable-rate mortgages carried an average fee of 0.5 points and the one-year ARM carried 0.6 points.

While this decline is great news for those looking to take out a mortgage in the near future, rates are still substantially above where they were even 12 months ago. A year ago, 30-year mortgages averaged 5.66 percent, 15-year loans stood at 5.25 percent, one-year ARMs 4.39 percent and five-year ARMs 5.15 percent.