Long Term Mortgage Rates Remain at Four Year Highs

Location: McLean
Author: Eileen Fitzpatrick
Date: Friday, June 30, 2006

Freddie Mac yesterday released the results of its Primary Mortgage Market Survey (PMMS) in which the 30-year fixed-rate mortgage (FRM) averaged 6.78 percent, with an average 0.5 point, for the week ending June 29, 2006, up from last week’s average of 6.71 percent. Last year at this time, the 30-year FRM averaged 5.62 percent. The 30-year FRM has not been higher since May 24, 2002, when it averaged 6.81 percent.

The average for the 15-year FRM this week is 6.43 percent, with an average 0.5 point, up from last week’s average of 6.36 percent. A year ago, the 15-year FRM averaged 5.20 percent. The 15-year FRM has not been higher since April 12, 2002, when it averaged 6.49 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 6.39 percent this week, with an average 0.5 point, up from last week when it averaged 6.32 percent. A year ago, the five-year ARM averaged 5.19 percent. This is the highest the 5-year ARM has been since Freddie Mac started tracking it on January 6, 2005.

One-year Treasury-indexed ARMs averaged 5.82 percent this week, with an average 0.8 point, also up from last week when it averaged 5.75 percent. At this time last year, the one-year ARM averaged 4.33 percent. The 1-year ARM has not been higher since the week ending June 8, 2001, when it averaged 5.85 percent.

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

“Financial markets continue to expect more rate hikes by the Fed over the next six months, which has added upward pressure on mortgage rates,” said Frank Nothaft, Freddie Mac vice president and chief economist. “With higher interest rates, the housing market has begun a gradual and orderly reversion towards historical norms. For instance, new construction, home sales and house price appreciation have all been slowing over the past few months.”

SUMMARY OF SURVEY RESULTS
Fixed-Rate Mortgages
	Average Conventional 30-Year Commitment Rate	Fees & Points	Average Conventional 15-Year Commitment Rate	Fees & Points
US	6.78	0.5	6.43	0.5
Northeast	6.80	0.4	6.46	0.4
Southeast	6.74	0.6	6.32	0.6
North Central	6.85	0.2	6.50	0.2
Southwest	6.78	0.5	6.41	0.4
West	6.76	0.7	6.46	0.7

Adjustable–Rate Mortgages
	5/1 ARM Commitment Rate	Fees & Points	Margin	1 Year ARM Commitment Rate	Fees & Points	Margin
US	6.39	0.5	2.76	5.82	0.8	2.77
Northeast	6.28	0.5	2.76	5.74	0.7	2.78
Southeast	6.32	0.6	2.75	5.93	0.8	2.75
North Central	6.53	0.3	2.82	5.80	0.7	2.81
Southwest	6.30	0.6	2.77	5.76	0.6	2.78
West	6.48	0.7	2.74	5.86	1.0	2.75

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	6.78	6.80	6.74	6.85	6.78	6.76
Fees & Points	0.5	0.4	0.6	0.2	0.5	0.7

15-YEAR FIXED RATE MORTGAGES


	US	NE	SE	NC	SW	W
AVERAGE	6.43	6.46	6.32	6.50	6.41	6.46
Fees & Points	0.5	0.4	0.6	0.2	0.4	0.7

5/1 ADJUSTABLE RATE MORTGAGES (ARMs)


	US	NE	SE	NC	SW	W
AVERAGE	6.39	6.28	6.32	6.53	6.30	6.48
Fees & Points	0.5	0.5	0.6	0.3	0.6	0.7

1-YEAR ADJUSTABLE RATE MORTGAGES (ARMs)


	US	NE	SE	NC	SW	W
AVERAGE	5.82	5.74	5.93	5.80	5.76	5.86
Fees & Points	0.8	0.7	0.8	0.7	0.6	1.0

THE NATIONAL MORTGAGE RATE SNAPSHOT


	One Year Ago
	30-YR FRM	15-YR FRM	5/1 ARM	1-YR ARM
AVERAGE	5.62	5.20	5.19	4.33
Fees & Points	0.6	0.7	0.7	0.7


	One Week Ago
	30-YR FRM	15-YR FRM	5/1 ARM	1-YR ARM
AVERAGE	6.71	6.36	6.32	5.75
Fees & Points	0.5	0.5	0.6	0.8