Mortgage rates take slightly downward turn

Mortgage rates fell for the second time in three weeks, but the move down was modest.

The benchmark 30-year fixed-rate mortgage dropped 1 basis point to 6.49 percent, according to the 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 0.35 discount and origination points.

One year ago, the mortgage index was 6.42 percent; four weeks ago, it was 6.32 percent. The benchmark 15-year fixed-rate mortgage, a popular mortgage choice for people considering a mortgage refinance, moved down 1 basis point to 6.17 percent. On bigger loans, the average jumbo 30-year fixed fell 3 basis points, to 7.24 percent.

Adjustable-rate mortgages also dipped. The popular 5/1 ARM fell 11 basis points, to 6.26 percent, while the 1-year ARM fell 1 basis point, to 6.13 percent.

This week, the Labor Department released September's consumer price index. Consumer inflation was about what the bond market expected. The core CPI, which excludes food and energy prices, came in at 0.2 percent, pretty much what was anticipated. The rest of the news is bad, but not unexpected. So, it all comes down to not much of a change in mortgage rates.

Slowdown in new

home construction

September's housing starts came in at a seasonally adjusted 1.19 million annual rate, according the statistics released by the Commerce Department Wednesday. The consensus forecast had been 1.29 million annual housing units.

Also this week, the National Association of Home Builders, or NAHB, reported that its housing market index reading for October slipped to a record-low level of 18. The index tracks U.S. home builders' perceptions about current single-family home sales and expectations for sales during the next six months. October's reading, released on Tuesday, is down 2 points from September and is the lowest reading since the index began in January 1985.

Home builders remain pessimistic about the current housing market for several reasons, including ongoing problems in the mortgage market, large inventories of unsold homes and the perception that negative media coverage has caused potential buyers to delay purchases, according to the NAHB.

We're in a housing recession and that is slowing down the entire economy, keeping interest rates down. Mortgage rates have really been steady for the past week or so.