Slowing US Housing Market Helps Keep Mortgage Rates Down

Location: McLean
Author: Eileen Fitzpatrick
Date: Friday, December 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 6.11 percent with an average 0.5 point for the week ending December 7, 2006, down from last week when it averaged 6.14 percent.  Last year at this time, the 30-year FRM averaged 6.32 percent.  This is the lowest the 30-year FRM has been since the week ending January 19, 2006, when it averaged 6.10 percent.
The 15-year FRM this week averaged 5.84 percent with an average 0.5 point, down from last week when it averaged 5.87 percent.  A year ago, the 15-year FRM averaged 5.87 percent.  This is the lowest the 15-year FRM has been since the week ending February 9, 2006 when it averaged 5.83 percent

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.92 percent this week, with an average 0.5 point, down from last week when it averaged 5.95 percent.  A year ago, the five-year ARM averaged 5.78 percent.  This is the lowest the 5-year ARM has been since the week ending February 9, 2006, when it averaged 5.89 percent.

One-year Treasury-indexed ARMs averaged 5.43 percent this week with an average 0.7 point, down from last week when it averaged 5.46 percent.  At this time last year, the one-year ARM averaged 5.16 percent.  This is the lowest the 1-year ARM has been since 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.)

“Continued signs of slowing in the housing market and weakness in the manufacturing sector helped keep mortgage rates down this week,” said Frank Nothaft, Freddie Mac vice president and chief economist.  “As a matter of fact, the 30-year FRM is very nearly the lowest it has been this year.  The only other time the 30-year FRM has been lower was in January when it fell to 6.10 percent.

“Looking forward in the housing market, we think that housing is about 2/3 of the way through the correction, and should stabilize by mid-year 2007.”


 

SUMMARY OF SURVEY RESULTS

Fixed-Rate Mortgages
  Average Conventional 30-Year Commitment Rate Fees & Points Average Conventional 15-Year Commitment Rate Fees & Points
US 6.11 0.5 5.84 0.5
Northeast 6.14 0.4 5.87 0.4
Southeast 6.05 0.7 5.80 0.7
North Central 6.21 0.2 5.91 0.3
Southwest 6.09 0.4 5.82 0.5
West 6.09 0.6 5.82 0.6

 

Adjustable–Rate Mortgages
  5/1 ARM Commitment Rate Fees & Points Margin 1 Year ARM Commitment Rate Fees & Points Margin
US 5.92 0.5 2.75 5.43 0.7 2.75
Northeast 5.93 0.4 2.76 5.43 0.6 2.75
Southeast 5.90 0.7 2.76 5.36 0.8 2.76
North Central 5.98 0.1 2.76 5.52 0.3 2.75
Southwest 5.90 0.6 2.77 5.50 0.7 2.77
West 5.90 0.7 2.74 5.40 0.8 2.74

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 October 26, 2006.  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 2005.  The weights are listed in the table below.

Freddie Mac Region

PMMS Weights

Northeast

24.5

Southeast

18.6

North Central

15.4

Southwest

10.4

West

31.0

PRIMARY MORTGAGE MARKET SURVEY RESULTS

30-YEAR FIXED RATE MORTGAGES

 
 

US

NE

SE

NC

SW

W
AVERAGE

6.11

6.14

6.05

6.21

6.09

6.09
Fees & Points

0.5

0.4

0.7

0.2

0.4

0.6

15-YEAR FIXED RATE MORTGAGES

 
 

US

NE

SE

NC

SW

W
AVERAGE

5.84

5.87

5.80

5.91

5.82

5.82
Fees & Points

0.5

0.4

0.7

0.3

0.5

0.6

5/1 ADJUSTABLE RATE MORTGAGES (ARMs)

 
 

US

NE

SE

NC

SW

W
AVERAGE

5.92

5.93

5.90

5.98

5.90

5.90
Fees & Points

0.5

0.4

0.7

0.1

0.6

0.7

1-YEAR ADJUSTABLE RATE MORTGAGES (ARMs)

 
 

US

NE

SE

NC

SW

W
AVERAGE

5.43

5.43

5.36

5.52

5.50

5.40
Fees & Points

0.7

0.6

0.8

0.3

0.7

0.8

THE NATIONAL MORTGAGE RATE SNAPSHOT

 

 

 One Year Ago

 

30-YR FRM

15-YR FRM

5/1 ARM

1-YR ARM
AVERAGE

6.32

5.87

5.78

5.16
Fees & Points

0.6

0.6

0.7

0.8

 

 

 

 One Week Ago

 

30-YR FRM

15-YR FRM

5/1 ARM

1-YR ARM
AVERAGE

6.14

5.87

5.95

5.46
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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