Long-Term US Mortgage Rates Drop Fifth Straight Week
Location: McLean
Author:
Eileen Fitzpatrick
Date: Friday, August 25, 2006
Freddie Mac yesterday
released the results of its Primary Mortgage Market Survey (PMMS) in which
the 30-year fixed-rate mortgage (FRM) averaged 6.48 percent with an
average 0.4 point for the week ending August 24, 2006, down from last
week’s average of 6.52 percent. Last year at this time, the 30-year FRM
averaged 5.77 percent. This is the lowest the 30-year FRM has been since
the week ending April 6, 2006, when it averaged 6.43 percent.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) fell to 6.14 percent this week, with an average 0.5 point, from last week’s rate of 6.18 percent. A year ago, the five-year ARM averaged 5.30 percent. 4/13 6.13%
One-year Treasury-indexed ARMs averaged 5.60 percent this week, with an average 0.7 point, was down from last week when it averaged 5.65 percent. At this time last year, the one-year ARM averaged 4.56 percent. 4/6 5.57
(Average commitment rates should be reported along with average fees and points to reflect the total cost of obtaining the mortgage.)
“The Fed has acknowledged that it is closely monitoring the housing market as it slows down from last year’s record pace,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Although this fuels arguments about whether we will experience a soft landing or a bursting housing bubble, market watchers also perceive that it possible that the Fed may stop raising short-term interest rates over the near term. This perception takes upward pressure off mortgage rates.
“Meanwhile, although both existing and new home sales for July fell below market expectations – confirming the slowdown in the housing market – we still expect 2006 to be the third highest year on record for total sales.”
|
SUMMARY OF SURVEY RESULTS |
||||
|
Fixed-Rate Mortgages |
||||
| Average Conventional 30-Year Commitment Rate | Fees & Points | Average Conventional 15-Year Commitment Rate | Fees & Points | |
| US | 6.48 | 0.4 | 6.18 | 0.4 |
| Northeast | 6.54 | 0.2 | 6.26 | 0.2 |
| Southeast | 6.46 | 0.5 | 6.17 | 0.5 |
| North Central | 6.49 | 0.3 | 6.20 | 0.3 |
| Southwest | 6.47 | 0.4 | 6.16 | 0.4 |
| West | 6.43 | 0.6 | 6.12 | 0.6 |
|
Adjustable–Rate Mortgages |
||||||
| 5/1 ARM Commitment Rate | Fees & Points | Margin | 1 Year ARM Commitment Rate | Fees & Points | Margin | |
| US | 6.14 | 0.5 | 2.77 | 5.60 | 0.7 | 2.75 |
| Northeast | 6.12 | 0.5 | 2.78 | 5.58 | 0.5 | 2.76 |
| Southeast | 6.11 | 0.6 | 2.76 | 5.59 | 0.9 | 2.75 |
| North Central | 6.25 | 0.3 | 2.78 | 5.69 | 0.4 | 2.76 |
| Southwest | 6.04 | 0.6 | 2.78 | 5.58 | 0.8 | 2.79 |
| West | 6.14 | 0.5 | 2.75 | 5.59 | 1.0 | 2.73 |
Freddie Mac defines its regions as follows:
Northeast: NY, NJ, PA, DE, MD, DC, VA, WV, PR, ME, NH, VT, MA, RI, CT, VI
Southeast: NC, SC, TN, KY, GA, AL, FL, MS
North Central: OH, IN, IL, MI, WI, MN, IA, ND, SD
Southwest: TX, LA, NM, OK, AR, MO, KS, CO, NE, WY
West: CA, AZ, NV, OR, WA, UT, ID, MT, HI, AK, GU
DEFINITIONS
Commitment Rate is the interest rate a lender would charge to lend mortgage money to a qualified borrower exclusive of the fees and points required by the lender. This commitment rate applies only to conventional financing on conforming mortgages with loan-to-value rates of 80 percent or less.
ARM Index –is the One-year Treasury
Loan to Value Ratio (LTV) is the ratio of the loan amount of a mortgage loan to the lower of the appraisal value or purchase price of the property securing the loan.
Origination Fees and Discount Points are the total charged by the lender at settlement. One point equals one percent of the loan amount.
Margin is a fixed amount added to the underlying index to establish the fully indexed rate for an ARM.
Weighted Averages for the Primary Mortgage Market Survey have been adjusted as of September 22, 2005. The new weights use the dollar volume of conventional mortgage originations within the 1-unit Freddie Mac loan limit as reported under the Home Mortgage Disclosure Act (HMDA) for 2004. The weights are listed in the table below.
|
Freddie Mac Region |
PMMS Weights |
|
Northeast |
24.6 |
|
Southeast |
16.5 |
|
North Central |
17.1 |
|
Southwest |
11.2 |
|
West |
30.7 |
PRIMARY MORTGAGE MARKET SURVEY RESULTS
30-YEAR FIXED RATE MORTGAGES
|
|
||||||
|
US |
NE |
SE |
NC |
SW |
W |
|
| AVERAGE |
6.48 |
6.54 |
6.46 |
6.49 |
6.47 |
6.43 |
| Fees & Points |
0.4 |
0.2 |
0.5 |
0.3 |
0.4 |
0.6 |
15-YEAR FIXED RATE MORTGAGES
|
|
||||||
|
US |
NE |
SE |
NC |
SW |
W |
|
| AVERAGE |
6.18 |
6.26 |
6.17 |
6.20 |
6.16 |
6.12 |
| Fees & Points |
0.4 |
0.2 |
0.5 |
0.3 |
0.4 |
0.6 |
5/1 ADJUSTABLE RATE MORTGAGES (ARMs)
|
|
||||||
|
US |
NE |
SE |
NC |
SW |
W |
|
| AVERAGE |
6.14 |
6.12 |
6.11 |
6.25 |
6.04 |
6.14 |
| Fees & Points |
0.5 |
0.5 |
0.6 |
0.3 |
0.6 |
0.5 |
1-YEAR ADJUSTABLE RATE MORTGAGES (ARMs)
|
|
||||||
|
US |
NE |
SE |
NC |
SW |
W |
|
| AVERAGE |
5.60 |
5.58 |
5.59 |
5.69 |
5.58 |
5.59 |
| Fees & Points |
0.7 |
0.5 |
0.9 |
0.4 |
0.8 |
1.0 |
THE NATIONAL MORTGAGE RATE SNAPSHOT
|
|
||||
|
|
One Year Ago | |||
|
|
30-YR FRM |
15-YR FRM |
5/1 ARM |
1-YR ARM |
| AVERAGE |
5.77 |
5.35 |
5.30 |
4.56 |
| Fees & Points |
0.5 |
0.6 |
0.6 |
0.7 |
|
|
||||
|
|
One Week Ago | |||
|
|
30-YR FRM |
15-YR FRM |
5/1 ARM |
1-YR ARM |
| AVERAGE |
6.52 |
6.20 |
6.18 |
5.65 |
| Fees & Points |
0.3 |
0.3 |
0.4 |
0.5 |
Freddie Mac's Primary Mortgage Market Survey (PMMS) is for informational purposes only and Freddie Mac is not responsible for business decisions made based on the reported results of the PMMS. Freddie Mac may change the methodology used to conduct the PMMS survey at any time and without notice.
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