Long-term mortgage rates tumble

30-year hits 5.78%,15-year falls to 5.33%; 1-year hits 4.21%; lender says inflation may be in check.
April 28, 2005: 11:37 AM EDT

NEW YORK (CNN/Money) - Long-term mortgage rates fell for the fourth straight week, Freddie Mac said Thursday, adding that Fed may not see inflation to be as great a threat as previously thought.

The mortgage firm said that when inflation is thought to be in check, mortgage rates naturally drift downward.

The average rate on 30-year fixed-rate mortgages fell to 5.78 percent this week, with an average 0.6 point payable up front, down from 5.80 percent last week, Freddie Mac said.

Last year at this time, the rate on the 30-year fixed-rate loan stood at 6.01 percent.

The 15-year mortgage rate averaged 5.33 percent, down from 5.36 percent. The loan averaged 5.35 percent a year ago.

"The market was disappointed on the news of lower consumer confidence and lower orders for durable goods," said Frank Nothaft, vice president and chief economist at Freddie Mac.

"These numbers suggest that the Fed will remain restrained in its practice of raising short term rates, which may be an indication the Fed doesn't see inflation to be as great a threat as the markets previously had thought it would be."

"And when inflation is thought to be in check, mortgage rates naturally drift downward as they did this week."

Five-year adjustable-rate mortgages (ARMs) averaged 5.20 percent, with an average half of a point payable up front, down from 5.22 percent the week before. There is no data available for a year-to-year comparisons since Freddie Mac only began tracking this loans this year.

One-year adjustable rate mortgages (ARMs) averaged 4.21 percent, down from last week's 4.26 percent, with an average 0.6 point payable up front. At this time last year, the one-year ARM rate averaged 3.75 percent.

Freddie Mac's average mortgage rates are based on a survey of 125 lenders nationwide.

New home sales surged a record 12.2 percent in March.