Mortgage rates have been on a gradual downward slide for most of the second half of 2000 after peaking at 8.64 percent in mid-May, lenders say. A year ago the rate averaged 8.18 percent.
Federal funds is the money banks lend each other overnight to meet certain reserve requirements.
The Fed does not directly control interest rates on consumer loans or mortgages, but as the money supply eases in response to the Fed's action, banks and other lenders typically decide to bring down rates. The New Year is shaping up to be the best time to buy a home in nearly two years. Rates haven't been below 6.5 percent since October of 1998, when they hit 6.49 percent. Earlier, in 1966 and 1967, borrowers paid an average of 6.3 percent to 6.4 percent. Rates were in the 5.81 percent to 5.94 percent range between 1963 and 1965.