Thursday, September 18, 2008

Fixed-Rate 30-Year Mortgages Fall Below 6% on Bailout News

Rates on 30-year fixed-rate home mortgages dropped substantially this week, falling under 6% for the first time since May in the wake of the government takeover of Fannie Mae and Freddie Mac, according to Freddie Mac's weekly rate survey.

The national average for the 30-year fixed-rate mortgage was 5.93%, down from 6.35% and 6.31% a year ago, according to Freddie Mac's weekly survey. The rate is down nearly 0.6 percentage point over the past months.

"This means that the monthly principal and interest payment on a new $200,000 loan is over $76 lower than a month ago," said Frank Nothaft, Freddie Mac chief economist, in a news release. He expects the movement to help spur home purchases and loan refinancing in coming weeks.

Fifteen-year fixed-rate mortgages averaged 5.54%, down from 5.90% and 5.97% a year ago.

Rates fell substantially earlier this week, after news of the government's bailout of Fannie Mae and Freddie Mac.

"Lower rates have occurred at an opportune time, as the July pending sales data from the National Association of Realtors were off 3.2% from June," Mr. Nothaft said. "Refinance applications are up 18% over the past three weeks through September 5th, indicating that refinance activity has already begun to pick up."

The MBA reported that mortgage applications filed are going up.

Wall Street Journal; September 12, 2008

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