US Long Term Rates Slip for Fourth Straight Week

The average for the 15-year FRM this week is 6.20 percent, with an average 0.3 point, unchanged from last week.  A year ago, the 15-year FRM averaged 5.40 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) fell to 6.18 percent this week, with an average 0.4 point, from last week’s rate of 6.21 percent.  A year ago, the five-year ARM averaged 5.34 percent.

One-year Treasury-indexed ARMs averaged 5.65 percent this week, with an average 0.5 point, was down from last week when it averaged 5.69 percent.  At this time last year, the one-year ARM averaged 4.58 percent.      

(Average commitment rates should be reported along with average fees and points to reflect the total cost of obtaining the mortgage.)

“Long term rates continue to relax as economic reports support a picture of a weakening housing sector and a slower growing economy,” said Frank Nothaft, Freddie Mac vice president and chief economist.  “This week’s news that July housing starts fell 2.5 percent added conviction to Fed Fund futures traders who are currently pricing contracts to suggest the chances of another rate increase from the central bank this year are about fifty-fifty.

“As a result, 30-year fixed-rate mortgages are down for the fourth straight week and are the lowest they’ve been since mid-April.  Meanwhile, ARM rates have gone down less.  All of which could help persuade homeowners with ARMs on the verge of resetting to make the decision to lock into a fixed-rate mortgage now rather than take a chance of a higher rate on the adjustment date.”


 

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.