Mortgage Rates Hit 20-Month Low

Mortgage interest rates fell this week to the lowest level in nearly 20 months but quickly headed higher after Federal Reserve Board Chairman Alan Greenspan’s inflation warning. The decline in the average rate on 30-year, fixed-rate mortgages to 7.26% from 7.31% a week earlier brought the average to its lowest level since the week ended Feb. 15, 1996, Freddie Mac said. However, anyone thinking of locking in a pending mortgage or refinancing an existing one may have missed an opportunity for the lowest rate. That’s because bond market rates--which serve as benchmarks for mortgages--bounced higher Wednesday after Greenspan, in congressional testimony, warned investors of the risk of higher inflation. Fifteen-year mortgages, a popular option for refinancing, averaged 6.82% this week, down from 6.87% and also the lowest since February 1996. On one-year adjustable-rate mortgages, lenders were asking an average initial rate of 5.49%, down from 5.52% and the lowest in 10 weeks. The rates do not include add-on fees.