Low Mortgage Rates Seen for Rest of Year

Mortgage rates will remain at the current levels for the rest of the year and rise only slightly in the second half of 2002, economists at the Mortgage Bankers Assn. of America said.

The trade group expects 30-year mortgage rates to stay at about 6.5% to 6.6% until economic growth picks up, and then rise to about 7.2% in the second half of next year. Even with the rise, rates would be below that of 2000, when they averaged 8.05%.

Analysts expect mortgage lending to top $1.8 trillion this year, driven by a boom in mortgage refinancing. The Mortgage Bankers Assn.’s weekly refinancing index rose to a record 5256 last week. It has averaged 1065 over the last five years.

The group said it expects the economy will contract in the last half of 2001 and expand again next year, helped by low interest rates and fiscal stimulus from the government.