Mortgage rates moved lower this week as financial markets grew more confident that the Federal Reserve would cool its 13-month-long interest-rate hikes, according to surveys conducted by Freddie Mac and Bankrate.com.

In Freddie Mac’s survey, the 30-year fixed-rate mortgage averaged 6.21 percent for the week ended today, down very slightly from last week’s average of 6.22 percent. The average for the 15-year fixed-rate mortgage is 5.76 percent, unchanged from last week. Points on both the 30- and 15-year averaged 0.5.

The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 5.78 percent this week, with an average 0.7 point, down very slightly from last week when it averaged 5.79 percent. The one-year Treasury-indexed ARM averaged 5.16 percent, with an average 0.7 point, up very slightly from last week when it averaged 5.15 percent.

“Financial markets paused this week, trying to decipher the December minutes of the Federal Reserve’s monetary policy committee, which seemed to hint that the Fed might slow the pace of rate hikes in 2006,” said Frank Nothaft, Freddie Mac vice president and chief economist. “As a result, mortgage rates were little changed this week. Interest rates for 30-year fixed-rate mortgages currently are below the monthly averages set in November and December of 2005.

“The interest-rate savings between 30-year fixed-rate mortgages and 1-year adjustable-rate mortgages fell about 0.6 percentage points to around one percentage point since the same time last year. This will likely slow ARM lending activity in 2006. Today, ARMs account for about 30 percent of new loans. We forecast that share to fall to around 25 percent by the end of 2006.”

In Bankrate.com’s survey, fixed mortgage rates fell slightly, the fourth consecutive weekly decline. The average 30-year fixed rate mortgage inched lower from 6.28 percent to 6.27 percent, according to Bankrate.com’s weekly national survey of large lenders. The 30-year fixed-rate mortgages in this week’s survey had an average of 0.27 discount and origination points.

The average 15-year fixed mortgage rate was also down in Bankrate.com’s survey, falling from 5.86 percent to 5.82 percent, while the average jumbo 30-year fixed-rate was unchanged at 6.45 percent. Adjustable-rate mortgages dipped as well, with the average 5/1 adjustable-rate mortgage dropping from 5.82 percent to 5.78 percent, while the average one-year ARM nosed down to 5.55 percent from 5.56 percent.

Mortgage rates of both flavors — fixed rate and adjustable rate — declined this week in response to release of the Federal Reserve’s Dec. 13 meeting minutes, Bankrate.com reported. Investors and market participants are hopeful that the Fed is nearing the end of the interest-rate increases. These hopes were buoyed by language in the Fed’s meeting minutes saying “the number of additional firming steps required probably would not be large.” Yields on Treasury securities from two years through 10 years in maturity declined, bringing many fixed and adjustable rates down also. Mortgage rates are closely related to yields on government bonds.

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 – 6.22 percent with 0.21 point

Los Angeles – 6.29 percent with 0.49 point

Chicago – 6.38 percent with 0.05 point

San Francisco – 6.33 percent with 0.21 point

Philadelphia – 6.23 percent with 0.27 point

Detroit – 6.29 percent with no points

Boston – 6.29 percent with 0.07 point

Houston – 6.25 percent with 0.51 point

Dallas – 6.3 percent with 0.41 point

Washington, D.C. – 6.1 percent with 0.52 point

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