MORTGAGE RATES SLUMP AHEAD OF FED ANNOUNCEMENT

Mortgage rates fell this week, as they have 12 times in the previous 14 weeks. The average 30-year fixed rate mortgage dropped from 5.66 percent to 5.61 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 0.36 discount and origination points.

The 15-year fixed rate mortgage, popular for refinancing, declined from 5.28 percent to 5.23 percent. The average rate for the jumbo 30-year fixed rate mortgage dipped from 5.93 percent to 5.9 percent. Adjustable rate mortgages were no different, with the average 5/1 adjustable rate mortgage sliding from 5.2 percent to 5.16 percent, while the one-year ARM inched lower from 4.69 percent to 4.68 percent.

Mortgage rates have moved in a narrow range in the past month, with the average 30-year fixed rate ranging from 5.61 percent to 5.73 percent. This week was no exception, with rates fluctuating very little in response to gyrating oil prices and an upcoming announcement by the Federal Reserve on June 30. Oil prices first exceeded, then retreated from, the $60 per barrel mark. The Fed is expected to boost short-term interest rates for the ninth time in the past year, a series of events that have had no effect on fixed mortgage rates. In fact, fixed mortgage rates have fallen throughout the past year. One year ago, the 30-year fixed rate mortgage was 6.3 percent. The unprecedented decline in fixed mortgage rates amid successive Fed interest rate hikes has soothed the sting of rising home equity and credit card rates for many borrowers, as refinancing at low fixed rates locks in monthly payments.

Mortgage rates remain near the lowest point of 2005. As a result, monthly mortgage payments are very affordable. One year ago, the average 30-year fixed mortgage rate was 6.3 percent. At the time, the monthly payment on a $165,000 loan was $1,021.31. With the average rate now 5.61 percent, the monthly payment on the same $165,000 loan is $948.27. Refinancing now would save $73 each month or more than $26,000 over the loan term.