Long Term US Mortgage Rates Lowest Since First of the Year

Freddie Mac released the results of its Primary Mortgage Market Survey (PMMS) in which the 30-year fixed-rate mortgage (FRM) averaged 6.18 percent with an average 0.5 point for the week ending November 22, 2006, down from last week when it averaged 6.24 percent.  Last year at this time, the 30-year FRM averaged 6.28 percent.  This is the lowest the 30-year FRM has been since the week ending January 26, 2006, when it averaged 6.12 percent.

The 15-year FRM this week averaged 5.91 percent with an average 0.5 point, down from last week when it averaged 5.94 percent.  A year ago, the 15-year FRM averaged 5.81 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 5.99 percent this week, with an average 0.6 point, down from last week when it averaged 6.04 percent.  A year ago, the five-year ARM averaged 5.75 percent.  This is the lowest the 5-year ARM has been since the week ending March 16, 2006, when it averaged 5.93 percent.

One-year Treasury-indexed ARMs averaged 5.49 percent this week with an average 0.6 point, down from last week when it averaged 5.53 percent.  At this time last year, the one-year ARM averaged 5.14 percent. 

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

“Housing starts in October were down more than expected, which the market saw as an indication housing would be a bigger drag on the economy than had previously been thought,” said Frank Nothaft, Freddie Mac vice president and chief economist.  “Slower growth usually means less inflation and less inflation means lower interest rates.  Hence, the drop in mortgage rates this week.”

SUMMARY OF SURVEY RESULTS
Fixed-Rate Mortgages
	Average Conventional 30-Year Commitment Rate	Fees & Points	Average Conventional 15-Year Commitment Rate	Fees & Points
US	6.18	0.5	5.91	0.5
Northeast	6.24	0.4	5.96	0.3
Southeast	6.10	0.7	5.86	0.7
North Central	6.24	0.3	5.96	0.3
Southwest	6.20	0.4	5.91	0.4
West	6.16	0.7	5.89	0.7

 

Adjustable–Rate Mortgages
	5/1 ARM Commitment Rate	Fees & Points	Margin	1 Year ARM Commitment Rate	Fees & Points	Margin
US	5.99	0.6	2.77	5.49	0.6	2.74
Northeast	5.97	0.5	2.81	5.56	0.4	2.75
Southeast	5.93	0.7	2.76	5.38	0.9	2.75
North Central	6.12	0.3	2.79	5.54	0.1	2.75
Southwest	5.96	0.5	2.78	5.54	0.7	2.80
West	5.98	0.7	2.73	5.45	0.9	2.71

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