30-Year Mortgage Rate Falls to 5.77%

Breaking News from Dow Jones via SmartMoney.com:

NEW YORK -(Dow Jones)- Mortgage rates fell during the past week for the second week in a row, though Freddie Mac, the congressionally chartered housing finance agency, reiterated Thursday that the fall in rates is more likely a blip than a long-term trend.

The average for 30-year fixed mortgage rates for the week ending Aug. 25, 2005, fell to 5.77% from 5.80% a week earlier, Freddie Mac said in its weekly primary mortgage market survey. One year ago, the 30-year fixed rate mortgage averaged 5.82%.

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This news should alarm some who believe that short-term bond rates could very well exceed long-term bond rates if Greenspan and the fed keep raising short-term rates. If such an event were to occur, it has proved a good indicator of an oncoming recession, which could start a kind of domino effect that would ultimately push mortgage rates up quick enough to pop a housing bubble.

— The Boy in the Big Housing Bubble