Long-term mortgage rates declined further this week as investors remained cautious about the housing market’s recovery, Freddie Mac and Bankrate.com reported today.

In Freddie Mac’s survey, the 30-year fixed-rate mortgage dipped to an average 6.68 percent from last week’s 6.69 percent, and the 15-year fixed-rate mortgage sank to 6.32 percent from 6.37 percent. Points, which are fees lenders charge for loan processing expressed as a percent of the loan, averaged 0.3 on the 30- and 15-year loans.

Adjustable-rate mortgage (ARM) costs also dipped this week, with the five-year Treasury-indexed hybrid ARM slipping from 6.3 percent to 6.29 percent and the one-year ARM sliding from 5.69 percent to 5.59 percent. Points on these loans averaged 0.5.

“Market investors seeking safety from the subprime fallout bought Treasury securities, pushing bond yields down and allowing mortgage rates to drift a bit lower,” Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement. “Sales of new and existing homes fell in June, and prices continue to weaken, especially in the markets that had recorded the strongest gains over the past few years. There are early signs, however, that the market is stabilizing. As construction spending levels off, the drag on GDP growth will continue to diminish. Meanwhile, the 5 percent rise in pending home sales in June suggests that sales in July and August may reverse last month’s decline.”

In Bankrate.com’s survey, mortgage rates were mostly lower, with the average 30-year fixed mortgage rate now 6.71 percent, and discount and origination points averaging 0.27.

The average 15-year fixed-rate mortgage popular for refinancing pulled back to 6.38 percent, Bankrate.com reported. Adjustable-rate mortgages were lower, with the average 5/1 ARM sinking to 6.36 percent and the average one-year ARM retreating to 5.95 percent.

Even though the average 30-year fixed rate declined to 6.71 percent, the rate on larger loans increased, according to Bankrate.com. The average rate for jumbo 30-year loans — those larger than $417,000 — moved up to 7.13 percent reflecting the increased nervousness of investors about mortgage borrowers’ creditworthiness. What results is a bigger mark-up over risk-free Treasury securities for larger loans that investors buy without the benefit of any loan guarantees. The increasing spread over government bond yields for all mortgage products is symptomatic of investors’ greater risk aversion.

According to Bankrate.com, fixed mortgage rates are nearly one-half percentage point higher than three months ago. At the time, the average 30-year fixed mortgage rate was 6.28 percent, meaning that a $200,000 loan would have carried a monthly payment of $1,235. With the average 30-year fixed rate now 6.71 percent, the same loan originated today would carry a monthly payment of $1,292.

The following is a sampling of Bankrate.com’s average 30-year-mortgage interest rates this week in some U.S. metropolitan areas:

New York – 6.72 percent with 0.06 point

Los Angeles – 6.74 percent with 0.44 point

Chicago – 6.77 percent with 0.04 point

San Francisco – 6.65 percent with 0.54 point

Philadelphia – 6.74 percent with 0.19 point

Detroit – 6.78 percent with 0.03 point

Boston – 6.75 percent with 0.08 point

Houston – 6.71 percent with 0.44 point

Dallas – 6.68 percent with 0.34 point

Washington, D.C. – 6.56 percent with 0.56 point

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