WASHINGTON, Nov 8 (Reuters) - Average rates on U.S. 30-year mortgages dropped slightly this week, mortgage giant Freddie Mac said on Thursday.
U.S. 30-year mortgage rates fell to an average of 6.24 percent from 6.26 percent last week, as 15-year mortgage rates dipped to 5.90 percent from 5.91 percent last week.
Short-term mortgage rates experienced more pronounced declines following the U.S. Federal Reserve’s cut of the benchmark federal funds rate by a quarter-percentage point to 4.5 percent last week.
One-year adjustable rate mortgages decreased to an average of 5.50 percent from 5.57 percent in the prior week.
Freddie Mac said the “5/1” ARM, set at a fixed rate for five years and adjustable each following year, averaged 5.89 percent, down from 5.98 percent a week ago.
A year ago, 30-year mortgages averaged 6.33 percent, 15-year mortgages averaged 6.04 percent and the one-year ARM averaged 5.55 percent. The 5/1 ARM averaged 6.08 percent.
“With mortgage rates remaining low, approximately 38 percent of applications were for refinance transactions in the third quarter, down from 42 percent in the second quarter of this year,” Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement.
“In addition, Freddie Mac estimates that families withdrew approximately $60 billion in home equity over the same quarter, down from about $81 billion in the second quarter 2007,” Nothaft said.
Lenders charged an average of 0.5 percent in fee and points on both 15-year mortgages and the 5/1 ARM, up from 0.4 percent last week.
Fees and points charged on 30-year mortgages and the one-year ARM were unchanged from the prior week at 0.4 percent and 0.6 percent, respectively.
Freddie Mac is a mortgage finance company chartered by Congress that buys mortgages from lenders and packages them into securities to sell to investors or to hold in its own portfolio. (Reporting by Ayesha Rascoe, editing by Leslie Adler)