Here’s something few people expected: Despite a rising federal deficit, an expanding economy and a largely “jobless” recovery, mortgage interest rates fell in December — from 6.02 percent plus .6 points on Dec. 4th to 5.81 percent plus .7 points on December 25th, according to Freddie Mac.

The drop is not quite as large as it seems — a somewhat larger cost for points eats up some of the benefit from lower rates. Still, given economic expansion and big deficits higher rates would seem to have been in order.

For a $100,000 loan, a borrower would pay $600.84 per month for principal and interest over 30 years at 6.02 percent. In comparison, the same loan at seven percent — a “low” rate not too long ago — would cost $665.30.

By the measures of the past several decades 2003 was a wonderful year to be a borrower. What about rates in 2004? No one knows for sure, but for the latest rate information and property trends speak with your local broker. There may be more — and good — surprises in the marketplace.

Existing-home sales set record for 2003

By JEANNINE AVERSA
Associated Press Writer

WASHINGTON — Sales of previously owned homes set a record high in 2003 as decades-low mortgage rates proved too good for many buyers to pass up.

The National Association of Realtors reported Monday that existing-home sales totaled 6.1 million last year, shattering the previous record of 5.57 million set in 2002. Last year’s sales represented a 9.6 percent increase from 2002′s level.

Monday’s report provided vivid evidence of the red-hot strength of the housing market, which played a main role in keeping the economy going throughout last year. In December, existing-home sales jumped by 6.9 percent from the month before, ending the year on a high note.

“Housing continues to boom,” said David Lereah, chief economist at the National Association of Realtors.

Low mortgage rates have powered the housing market.

The average rate on a 30-year, fixed-rate mortgage for all of 2003 was 5.83 percent, the lowest annual average since Freddie Mac began tracking interest rates in 1971.

Lereah predicts that existing-home sales will slow a bit this year, clocking in around 5.80 million, which would still represent a healthy pace.

In 2003, the median price of an existing home was $169,900, up 7.5 percent from the median price of $158,100 in 2002. The median price is where half sell for more and half sell for less. Last year’s increase in home price appreciation was the largest since 1980, when the median price rose by 11.7 percent.

Solid appreciation in home prices along with a refinancing boom last year helped to underpin consumer spending, the lifeblood of the economy.