Mixed Economic Indicators Cause Slight Fluctuations in US Mortgage Rates

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 6.23 percent this week, with an average 0.5 point, up a little from last week when it averaged 6.20 percent.  A year ago, the five-year ARM averaged 5.10 percent. 

One-year Treasury-indexed ARMs averaged 5.66 percent this week, with an average 0.6 point, also up from last week when it averaged 5.63 percent.  At this time last year, the one-year ARM averaged 4.25 percent. 

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

“Mixed economic indicators are causing some volatility in financial markets.  This invariably leads to the fluctuations in mortgage rates like what we have seen recently,” said Frank Nothaft, Freddie Mac vice president and chief economist.  “Still, there has been no drastic movement in mortgage rates and we see nothing on the horizon that would bring about any extreme rise or fall in rates going forward.  Our economic forecast still indicates strongly that, even with gradually rising rates, 2006 may well be the third strongest year on record for housing."

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.