US Long Term Mortgage Rates Drop for Eight of the Last Nine Weeks

Freddie Mac yesterday released the results of its Primary Mortgage Market Survey (PMMS) in which the 30-year fixed-rate mortgage (FRM) averaged 6.31 percent with an average 0.4 point for the week ending September 28, 2006, down from last week when it averaged 6.40 percent.  Last year at this time, the 30-year FRM averaged 5.91 percent.  This is the lowest the 30-year FRM has been since the week of March 2, 2006, when it averaged 6.24 percent.

The 15-year FRM this week averaged 5.98 percent with an average 0.4 point, down from last week when it averaged 6.06 percent.  A year ago, the 15-year FRM averaged 5.48 percent.  This is the lowest the 15-year FRM has been since the week ending March 2, 2006, when it averaged 5.89 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 6.00 percent this week, with an average 0.5 point, down from last week when it averaged 6.08 percent.  A year ago, the five-year ARM averaged 5.44 percent.  This is the lowest the 15-year FRM has been since the week ending March 23, 2006, when it averaged 5.97 percent.

One-year Treasury-indexed ARMs averaged 5.47 percent this week with an average 0.6 point, down from last week when it averaged 5.54 percent.  At this time last year, the one-year ARM averaged 4.68 percent.  The 1-year ARM has not been lower since the week ending March 23, 2006, when it averaged 5.41 percent.

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

“This week’s economic releases, which showed a slight one-year decline in both new and existing house prices in August, fell short of market expectations and prompted market analysts to reassess how much the housing sector will contribute to economic growth in the coming year,” said Frank Nothaft, Freddie Mac vice president and chief economist. “As a result, mortgage rates declined even further this week to match those set six months ago. One bright note in the releases was that the average time new homes stood for sale narrowed from 6.6 months to 6.3 months in August, which should mitigate some of the softening of new home prices over the next few months.  In addition, both lower mortgage rates and a moderation in house price growth should lead to increased housing affordability – especially as family incomes are forecasted to continue rising.”

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.

PRIMARY MORTGAGE MARKET SURVEY RESULTS

30-YEAR FIXED RATE MORTGAGES

15-YEAR FIXED RATE MORTGAGES

5/1 ADJUSTABLE RATE MORTGAGES (ARMs)

1-YEAR ADJUSTABLE RATE MORTGAGES (ARMs)

THE NATIONAL MORTGAGE RATE SNAPSHOT