Mortgage rates are expected to dive in 2008

Deseret News (Salt Lake City), Mar 4, 2008 by Bloomberg News

Freddie Mac, the world's second- largest buyer of home loans, said the average U.S. fixed mortgage rate in 2008 probably will tumble more than three-quarters of a percentage point to the lowest in at least 45 years.

The average rate for a 30-year fixed mortgage will fall to 5.5 percent from 6.3 percent last year, the McLean, Va.-based company said in a forecast Monday. That would be the lowest annual average in records that go back to 1963.

The low rates won't be enough to spur a recovery in the U.S. real- estate market, said Brian Bethune, an economist at Global Insight Inc., based in Lexington, Mass. Bethune forecasts the average fixed rate will be 5.4 percent this year. "People are going to stay away from the market if they see instability," he said.

Economic growth will slow to 2.3 percent this year from 2.5 percent last year, Freddie Mac said in the forecast.