Mortgage rates fall to 10-month low
By Holden Lewis • Bankrate.com

Trying to make sense of today's economy is like trying to discern meaning in the shapes of the ever-shifting clouds. Which is another way of saying that mortgage rates fell again this week, but they conceivably could have gone up.

- advertisement -

The benchmark 30-year fixed-rate mortgage fell for the fifth week in a row, this time by 5 basis points, to 6.17 percent, according to the Bankrate.com national survey of large lenders. A basis point is one-hundredth of 1 percentage point. The mortgages in this week's survey had an average total of 0.3 discount and origination points.

The 30-year rate dropped to its lowest level since Jan. 25, when it was also 6.17 percent. One year ago, the mortgage index was 6.36 percent; four weeks ago, it was 6.31 percent.

The 15-year fixed-rate mortgage fell 5 basis points to 5.91 percent. The 5/1 adjustable-rate mortgage plummeted 10 basis points to 6.01 percent.

Weekly national mortgage survey

Results of Bankrate.com's Nov. 29, 2006, weekly national survey of large lenders and the effect on monthly payments for a $165,000 loan:

Mixed data
A lot of economic data arrived in the last week, and it presented a mixed picture. Existing home sales rose in October when compared to September, but plunged 11.5 percent when compared to the previous October. There was a 7.4-month supply of houses for resale, which is a sign of a buyer's market.

More to the point, half of the houses and condos resold in October cost more than $221,000, compared to $229,000 in October 2005. That's a 3.5 percent decline in the median price.

The National Association of Realtors' president, Pat Vredevoogd Combs, said, "Sellers are cutting their price enough to encourage sales." An ice cream shop does the same thing during a power outage in July, and it's equally a sign of desperation.

Calculate a monthly mortgage payment Enter the requested information, and click "next" to calculate your payment. • Find the best interest rates in your area.

Mortgage amount: $ Loan term:   years Interest rate:   % per year

Home prices rising ... sort of
The government reported that sales of new houses fell in October, but the median price was 1.9 percent higher than a year earlier. That higher price seems rather hard to believe, and the president of the National Association of Home Builders said that "nearly half of the builders are now trimming prices and most are offering nonprice sales incentives." Those incentives take the form of better materials for the same price, paying discount points on the buyer's mortgage and that sort of thing.

"We have not hit the bottom. That's a certainty," says Ellen Bitton, president of New York-based Park Avenue Mortgage. But she adds that there are positive factors, the main one being that interest rates have been falling. That gives people an incentive to buy homes now, before mortgage rates rise again. "Those properties that are well-located and well-priced are still going like hot cakes," Bitton says.