US Long-Term Mortgage Rates Dip to Spring Levels

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 6.10 percent this week, with an average 0.6 point, down from last week when it averaged 6.14 percent.  A year ago, the five-year ARM averaged 5.26 percent.

One-year Treasury-indexed ARMs averaged 5.60 percent this week with an average 0.7 point, down from last week when it averaged 5.63 percent.  At this time last year, the one-year ARM averaged 4.46 percent.

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

“Although 30-year mortgage rates are about three-fourths of a percentage point higher than they were last year, it’s good to keep in mind that rates have dropped from the high of 6.80 percent reached just eight weeks ago,” said Frank Nothaft, Freddie Mac vice president and chief economist.  “And with short-term interest rate increases seemingly on hold, for a while at least, interest rates over all should not experience any big shifts in either direction.

“The risk to our forecast of relatively stable mortgage rates is that inflation will unexpectedly heat up, causing bond markets to raise their expectations that the Fed will intervene by raising short-term rates.  In that case, mortgage rates will again start to rise.”

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.