Signs of Lower Inflation Push US Mortgage Rates Lower
Location: McLean
Author:
Eileen Fitzpatrick
Date: Friday, November 17, 2006
Freddie Mac yesterday released the results of its Primary Mortgage Market Survey (PMMS) in which the 30-year fixed-rate mortgage (FRM) averaged 6.24 percent with an average 0.5 point for the week ending November 16, 2006, down from last week when it averaged 6.33 percent. Last year at this time, the 30-year FRM averaged 6.37 percent.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 6.04 percent this week, with an average 0.5 point, down from last week when it averaged 6.08 percent. A year ago, the five-year ARM averaged 5.86 percent.
One-year Treasury-indexed ARMs averaged 5.53 percent this week with an average 0.5 point, down from last week when it averaged 5.55 percent. At this time last year, the one-year ARM averaged 5.20 percent.
(Average commitment rates should be reported along with average fees and points to reflect the total cost of obtaining the mortgage.)
“Both long- and short-term mortgage rates fell this week on early signs that the threat of inflation may be waning,” said Frank Nothaft, Freddie Mac vice president and chief economist. “The Producer Price Index (PPI) and Consumer Price Index (CPI) for October came in lower than expected and bond yields dropped, pulling mortgage rates lower.
“We’ve probably seen the worst of the
housing slump, although it may not have entirely bottomed out yet. On
the other hand, lower mortgage rates should help stimulate activity in
the housing market.”
|
SUMMARY OF SURVEY RESULTS |
||||
|
Fixed-Rate Mortgages |
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| Average Conventional 30-Year Commitment Rate | Fees & Points | Average Conventional 15-Year Commitment Rate | Fees & Points | |
| US | 6.24 | 0.5 | 5.94 | 0.5 |
| Northeast | 6.29 | 0.3 | 5.99 | 0.3 |
| Southeast | 6.19 | 0.8 | 5.87 | 0.8 |
| North Central | 6.27 | 0.4 | 5.98 | 0.4 |
| Southwest | 6.27 | 0.5 | 5.94 | 0.5 |
| West | 6.22 | 0.6 | 5.94 | 0.6 |
|
Adjustable–Rate Mortgages |
||||||
| 5/1 ARM Commitment Rate | Fees & Points | Margin | 1 Year ARM Commitment Rate | Fees & Points | Margin | |
| US | 6.04 | 0.5 | 2.76 | 5.53 | 0.5 | 2.77 |
| Northeast | 6.00 | 0.5 | 2.76 | 5.56 | 0.5 | 2.76 |
| Southeast | 6.03 | 0.6 | 2.76 | 5.53 | 0.8 | 2.76 |
| North Central | 6.10 | 0.4 | 2.80 | 5.49 | 0.3 | 2.76 |
| Southwest | 6.04 | 0.5 | 2.77 | 5.52 | 0.6 | 2.80 |
| West | 6.04 | 0.6 | 2.74 | 5.54 | 0.5 | 2.77 |
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 |
6.24 |
6.29 |
6.19 |
6.27 |
6.27 |
6.22 |
| Fees & Points |
0.5 |
0.3 |
0.8 |
0.4 |
0.5 |
0.6 |
15-YEAR FIXED RATE MORTGAGES
|
|
||||||
|
US |
NE |
SE |
NC |
SW |
W |
|
| AVERAGE |
5.94 |
5.99 |
5.87 |
5.98 |
5.94 |
5.94 |
| Fees & Points |
0.5 |
0.3 |
0.8 |
0.4 |
0.5 |
0.6 |
5/1 ADJUSTABLE RATE MORTGAGES (ARMs)
|
|
||||||
|
US |
NE |
SE |
NC |
SW |
W |
|
| AVERAGE |
6.04 |
6.00 |
6.03 |
6.10 |
6.04 |
6.04 |
| Fees & Points |
0.5 |
0.5 |
0.6 |
0.4 |
0.5 |
0.6 |
1-YEAR ADJUSTABLE RATE MORTGAGES (ARMs)
|
|
||||||
|
US |
NE |
SE |
NC |
SW |
W |
|
| AVERAGE |
5.53 |
5.56 |
5.53 |
5.49 |
5.52 |
5.54 |
| Fees & Points |
0.5 |
0.5 |
0.8 |
0.3 |
0.6 |
0.5 |
THE NATIONAL MORTGAGE RATE SNAPSHOT
|
|
||||
|
|
One Year Ago | |||
|
|
30-YR FRM |
15-YR FRM |
5/1 ARM |
1-YR ARM |
| AVERAGE |
6.37 |
5.90 |
5.86 |
5.20 |
| Fees & Points |
0.6 |
0.6 |
0.6 |
0.6 |
|
|
||||
|
|
One Week Ago | |||
|
|
30-YR FRM |
15-YR FRM |
5/1 ARM |
1-YR ARM |
| AVERAGE |
6.33 |
6.04 |
6.08 |
5.55 |
| Fees & Points |
0.4 |
0.6 |
0.7 |
0.8 |
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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