Mortgage Rates Drop Again

Market Watch

15-year fixed-rate mortgage sets record low for fourth week in a row

Bond yields fell and mortgage rates followed after a relatively weak employment report, allowing the 30-year fixed-rate mortgage to hover near its record low set late last year, Freddie Mac's chief economist said on Thursday.

The 30-year fixed-rate mortgage averaged 4.72% for the week ending June 10, down from 4.79% last week and 5.59% a year ago, according to Freddie Mac's weekly survey of conforming mortgage rates.

The 15-year fixed-rate mortgage set a record low for the fourth week in a row, averaging 4.17% this week, down from 4.20% last week and 5.06% a year ago. Freddie Mac started tracking the mortgage in August 1991.

Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 3.92%, down from 3.94% last week and 5.17% a year ago. And 1-year Treasury-indexed ARMs averaged 3.91%, down from 3.95% last week and 5.04% a year ago; the ARM hasn't been lower since the week ending May 27, 2004, when it averaged 3.87%.

To obtain the rates, the fixed-rate mortgages and the 5-year ARM required payment of an average 0.7 point, and the 1-year ARM required an average 0.6 point. A point is 1% of the mortgage amount, charged as prepaid interest.

"Following a relatively weak employment report, bond yields fell this week and mortgage rates followed," said Frank Nothaft, Freddie Mac vice president and chief economist, in a news release. "Private payrolls rose by 41,000 jobs in May, less than a quarter of the market forecast consensus of an 180,000 gain."

The economy is showing signs of improvement, Nothaft added.

"The Federal Reserve reported in its June 9 regional economic review that the economy strengthened in all 12 of its Districts over April and May. It also noted that loan quality was stable or improving in most Districts, but remained an issue for banks with large exposure to real estate," he said.

30-Year Loans Now Below 5%

The Washington Post

Rates for 30-year home loans fell below 5 percent this week but remained above last month's record lows.

The average rate on a 30-year, fixed-rate mortgage was 4.99 percent, down from 5.06 percent a week earlier, mortgage company Freddie Mac said Thursday.

It was the third straight weekly decline. The drop comes after interest rates fell in the bond market this week as concerns about the economy increased demand for the safety of government debt, which is closely tied to mortgage rates.

The average rate on 15-year, fixed-rate mortgages fell to 4.4 percent, down from 4.45 percent last week, according to Freddie Mac.

Rates on five-year, adjustable-rate mortgages averaged 4.27 percent, down from 4.32 percent a week earlier. Rates on one-year, adjustable-rate mortgages dropped to 4.32 percent from 4.39 percent.

Borrowers can lower their interest rates by buying points, equal to 1 percent of the total loan amount. The nationwide averages in Freddie Mac's survey were 0.7 points for 30-year loans and 0.6 points for 15-year, five-year and one-year loans.

Falling mortgage rates might help bolster the nation's housing market as borrowing becomes less expensive for consumers. The decline in home-loan rates boosted the number of mortgage applications by more than 9 percent last week, according to data from the Mortgage Bankers Association.

The Mortgage Bankers Association's index of applications to purchase a home or refinance a mortgage rose 9.1 percent in the week ended Jan. 15, led by a surge in refinancing. The group's refinancing gauge gained 11 percent, while the purchase index advanced 4.4 percent.

30 Year Mortgage Rates Fall To Average Of 5.09%

USA Today

Rates for 30-year home loans inched downward this week, first decline in a month, but remained above last month's record lows.

The average rate on a 30-year fixed mortgage was 5.09% this week, down from 5.14% a week earlier, mortgage company Freddie Mac said Thursday.

Rates dropped to a record low 4.71% in early December, pushed down by an aggressive government campaign to reduce consumers' borrowing costs, but then rose steadily the rest of the month.

The average rate on a 15-year fixed-rate mortgage fell to 4.5% this week, from 4.54% last week, according to Freddie Mac.

Rates on five-year, adjustable-rate mortgages averaged 4.44%, unchanged from a week earlier. Rates on one-year, adjustable-rate mortgages fell to an average 4.31% from 4.33%.

The rates do not include add-on fees known as points. One point is equal to 1% of the total loan amount.

The nationwide fee for loans in Freddie Mac's survey averaged 0.7 point for 30-year and 15-year loans and 0.6 point for five-year and one-year loans.

Freddie Mac collects mortgage rates Monday through Wednesday each week from lenders around the country. Rates often fluctuate significantly, even within a day, often in line with interest rates on long-term Treasury bonds.

The Federal Reserve is pumping $1.25 trillion into mortgage-backed securities to try to bring down mortgage rates, but that money is set to run out in the spring. The goal of the program is to make home buying more affordable and prop up the housing market, including Raleigh real estate.

The central bank's policymakers have been conflicted about whether to expand or cut back a program intended to drive down mortgage rates and bolster the housing market, according to meeting minutes released Wednesday.

Some Fed policymakers argued that the program might need to be expanded and extended beyond its current end date of March 31, arguing that the additional dose of stimulus would be especially needed if the economic recovery were to weaken.

However, one member thought the program could be scaled back given the improvement in economic and financial conditions.

Getting the housing market back on firm footing is key to a lasting recovery. The collapse of the housing market, which dragged down home prices, was the catalyst for the longest and worst recession to hit the country since the 1930s.

Mortgage Rates Hit 1971 Levels

As Originally Posted to Seeking Alpha

The gap between the 10-year Treasury note and the 15-year / 30-year fixed-rate mortgages has narrowed, not surprisingly, since the Federal Reserve began actively buying mortgage securities in January (see Bloomberg article).

The average rate on a 30-year fixed mortgage fell to 4.96 percent in January, the lowest it has been when considering data that goes back to 1971. Rates were recently at 4.98 percent. With a promise to increase mortgage-backed security purchases by an additional $750 billion, along with as much as $300 billion in Treasury purchases over the next 6 months, rates obtained with the help of a Raleigh real estate agency should continue to be under pressure in the near term.

As the Fed continues to support low rates in hopes that consumers will either refinance or make a new home purchase, others are also encouraging consumers to purchase now, but for different reasons. Given the flood of money entering the market, consumers will eventually begin seeing inflationary pressures. Now may be the time to act while both rates and prices are low.