US Housing Shifts Toward Buyer’s Market This Year

Location: McLean
Author: Eileen Fitzpatrick
Date: Friday, September 8, 2006
 

Freddie Mac yesterday released the results of its Primary Mortgage Market Survey (PMMS) in which the 30-year fixed-rate mortgage (FRM) averaged 6.47 percent with an average 0.4 point for the week ending September 7, 2006, up from last week’s average of 6.44 percent.  Last year at this time, the 30-year FRM averaged 5.71 percent. 

The average for the 15-year FRM this week is averaged 6.16 percent with an average 0.4 point, up from last week when it averaged 6.14 percent.  A year ago, the 15-year FRM averaged 5.30 percent. 

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 6.14 percent this week, with an average 0.5 point, up from last week’s rate of 6.11 percent.  A year ago, the five-year ARM averaged 5.24 percent.

One-year Treasury-indexed ARMs averaged 5.63 percent this week with an average 0.7 point, up from last week when it averaged 5.59 percent.  At this time last year, the one-year ARM averaged 4.45 percent.

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

“We expect that mortgage rates will continue to fluctuate as new economic data are released, but still remain in the 6½ to 7 percent range for the rest of the year,” said Frank Nothaft, Freddie Mac vice president and chief economist.  “Slowly rising mortgage rates are offset in part by a slowdown in house price appreciation.

“Consequently, higher rates have resulted in houses sitting on the market for longer periods of time, changing the real estate sector into more of a buyer’s market from the seller’s market of the last few years.  This is a plus, as it allows potential homebuyers more time to look around and decide what they really want and what they can afford.”

 

SUMMARY OF SURVEY RESULTS

Fixed-Rate Mortgages
  Average Conventional 30-Year Commitment Rate Fees & Points Average Conventional 15-Year Commitment Rate Fees & Points
US 6.47 0.4 6.16 0.4
Northeast 6.49 0.3 6.17 0.3
Southeast 6.45 0.5 6.14 0.5
North Central 6.50 0.3 6.15 0.4
Southwest 6.46 0.5 6.17 0.4
West 6.46 0.5 6.16 0.4
 

 

Adjustable–Rate Mortgages
  5/1 ARM Commitment Rate Fees & Points Margin 1 Year ARM Commitment Rate Fees & Points Margin
US 6.14 0.5 2.76 5.63 0.7 2.75
Northeast 6.10 0.4 2.76 5.51 0.4 2.75
Southeast 6.13 0.8 2.76 5.60 0.8 2.76
North Central 6.25 0.5 2.76 5.69 0.8 2.75
Southwest 6.11 0.6 2.78 5.74 0.8 2.81
West 6.12 0.4 2.74 5.69 0.8 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

6.47

6.49

6.45

6.50

6.46

6.46
Fees & Points

0.4

0.3

0.5

0.3

0.5

0.5

15-YEAR FIXED RATE MORTGAGES

 
 

US

NE

SE

NC

SW

W
AVERAGE

6.16

6.17

6.14

6.15

6.17

6.16
Fees & Points

0.4

0.3

0.5

0.4

0.4

0.4

5/1 ADJUSTABLE RATE MORTGAGES (ARMs)

 
 

US

NE

SE

NC

SW

W
AVERAGE

6.14

6.10

6.13

6.25

6.11

6.12
Fees & Points

0.5

0.4

0.8

0.5

0.6

0.4

1-YEAR ADJUSTABLE RATE MORTGAGES (ARMs)

 
 

US

NE

SE

NC

SW

W
AVERAGE

5.63

5.51

5.60

5.69

5.74

5.69
Fees & Points

0.7

0.4

0.8

0.8

0.8

0.8

THE NATIONAL MORTGAGE RATE SNAPSHOT

 

 

 One Year Ago

 

30-YR FRM

15-YR FRM

5/1 ARM

1-YR ARM
AVERAGE

5.71

5.30

5.24

4.45
Fees & Points

0.6

0.6

0.6

0.7

 

 

 

 One Week Ago

 

30-YR FRM

15-YR FRM

5/1 ARM

1-YR ARM
AVERAGE

6.44

6.14

6.11

5.59
Fees & Points

0.4

0.4

0.5

0.7

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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