Mortgage Rates Dip Slightly

Mortgage rates dipped slightly this week as financial markets liked signals from the Federal Reserve that its string of interest rate hikes could be drawing to a close.

Mortgage giant Freddie Mac reported Thursday that rates on 30-year, fixed-rate mortgages averaged 6.30 percent this week, down slightly from 6.32 percent last week.

Rates on 30-year mortgages had hit 6.37 percent on Nov. 17, the highest level in more than two years. Analysts said even with the small declines in recent weeks, they expect the general trend will be for rates to move higher over the next year.

For that reason, they are forecasting that the housing sector, which has been cooling under the weight of rising rates, will slow further in coming months. The slowdown, however, won't be enough to stop sales of both existing and new homes from setting a fifth straight record in 2005, economists said.

Which way will mortgage rates go? Expect more of the same over the next 30 to 45 days, say half of the economists surveyed by Bankrate.com. Of the remaining half, 25 percent predict an increase while 25 percent predict a decline.