Mortgage rates fall again

October 11, 2001: 2:04 p.m. ET

U.S. 30-year, 15-year mortgages tumble for the sixth consecutive week.

NEW YORK (CNNmoney) - Interest rates on U.S. 30-year fixed-rate mortgages were at their lowest this week since October 1998, while rates on 15-year mortgages slipped to the lowest level since 1991, according to Freddie Mac.

The 30-year fixed-rate mortgage averaged 6.58 percent, with an average 0.9 point, for the week ending Oct. 12, down from 6.64 percent last week. A year ago, the 30-year fixed rate stood at 7.84 percent.

The long-term rate has not been this low since the week ending Oct. 9, 1998, when it averaged 6.49 percent.

At the same time, the 15-year fixed rate mortgage this week averaged 6.06 percent, with an average 0.9 point, down from last week's average of 6.11 percent. The same mortgage stood at 7.52 percent during the same period last year.

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And the one-year adjustable-rate mortgages (ARMs) indexed to the Treasury averaged 5.26 percent this week, with an average 0.9 point. That rate is down slightly from last week's average of 5.34 percent. One-year ARMs averaged 7.23 percent last year.

The one-year ARM has not been this low since the week ending Feb. 16, 1996, when it averaged 5.19 percent.

"Although mortgage rates dropped this week, we would not be surprised to see adjustable rate mortgage rates drop even further in the coming weeks," said Freddie Mac chief economist Robert Van Order. "This is because the ARMs more closely respond to actions taken by the Federal Reserve Board and current expectations are that the Fed will cut rates by one-half of a percent by the end of the year."

Van Order added that fixed-rate mortgages, on the other hand, are expected to rise slightly because of proposed fiscal measures that are aimed at energizing the economy.

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Freddie Mac (FRE: down $2.81 to $63.94, Research, Estimates), or Federal Home Mortgage Corp., is a publicly traded company the government established in 1970 to provide a flow of funds to mortgage lenders.

It buys mortgages from banks, bundles them and then resells them as mortgage-backed securities. Its products, and the products of other similar entities, have become increasingly popular as an alternative to government-backed bonds, particularly with international investors.