Mortgage Rates Rise on Consumer Confidence and Fed Remarks

The 15-year FRM this week averaged 6.06 percent with an average 0.4 point, up from last week when it averaged 5.92 percent.  A year ago, the 15-year FRM averaged 6.23 percent. 

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 6.02 percent this week, with an average 0.5 point, up from last week when it averaged 5.92 percent.  A year ago, the 5-year ARM averaged 6.21 percent. 

One-year Treasury-indexed ARMs averaged 5.64 percent this week with an average 0.6 point, up from last week when it averaged 5.48 percent.  At this time last year, the 1-year ARM averaged 5.61 percent. 

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

“Stronger than expected consumer confidence and recent comments from members of the Federal Reserve (Fed) raised some inflation concerns in the market, causing it to lower expectations of a Fed rate cut this year.  This helped push mortgage rates higher this week,” said Frank Nothaft, vice president and chief economist.  “We expect a gradual rise in mortgage rates over the remainder of the year with sales slipping further in the second half of the year.  A gradual recovery returns toward the end of 2007 with modest increases in sales and construction during 2008.

“The slowdown in the housing market is evident in home sales.  Over the first three months of 2006, interest rates for 30-year fixed-rate mortgages averaged 6.25 percent, which spurred 1.11 million (annualized) new home sales, and although mortgage rates in the first quarter of 2007 averaged a little lower than those in 2006, they fostered only 0.86 million in sales, or a 23 percent drop; existing home sales fell 7 percent.”

Freddie Mac defines its regions as follows:
Northeast:  NY, NJ, PA, DE, MD, DC, VA, WV, ME, NH, VT, MA, RI, CT
Southeast:  NC, SC, TN, KY, GA, AL, FL, MS, PR, VI
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.

PRIMARY MORTGAGE MARKET SURVEY RESULTS

30-YEAR FIXED RATE MORTGAGES

15-YEAR FIXED RATE MORTGAGES

5/1 ADJUSTABLE RATE MORTGAGES (ARMs)

1-YEAR ADJUSTABLE RATE MORTGAGES (ARMs)

THE NATIONAL MORTGAGE RATE SNAPSHOT

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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