Lower Than Expected Inflation and Weaker Housing Allowed Most US Mortgage Rates to Ease

Freddie Mac (NYSE:FRE) yesterday released the results of its Primary Mortgage Market Survey (PMMS) in which the 30-year fixed-rate mortgage (FRM) averaged 6.04 percent with an average 0.6 point for the week ending October 23, 2008, downfrom last week when it averaged 6.46 percent.  Last year at this time, the 30-year FRM averaged 6.33 percent. 

The 15-year FRM this week averaged 5.72 percent with an average 0.6 point, down from last week when it averaged 6.14 percent.  A year ago at this time, the 15-year FRM averaged 5.99 percent. 

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 6.06 percent this week, with an average 0.6 point, down from last week when it averaged 6.14 percent.  A year ago, the 5-year ARM averaged 6.03 percent. 

One-year Treasury-indexed ARMs averaged 5.23 percent this week with an average 0.5 point, upfrom last week when it averaged 5.16 percent.  At this time last year, the 1-year ARM averaged 5.66 percent. 

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

“Long-term mortgage rates fell this week amid news of tame inflation and a weaker housing market,” said Frank Nothaft, Freddie Mac vice president and chief economist.  “Consumer prices were unchanged in September and core prices, which exclude food and energy products, rose by only 0.1 percentage point, all below the market consensus.  On a year-over-year basis growth in core consumer prices remained at a 2.5 percent clip.

“New construction on one-family homes fell 12 percent in September to an annual rate of 544,000 homes, the lowest since February 1982.  One-unit housing starts are now 70 percent below its peak set in January 2006, according to the Department of Commerce.  Meanwhile, homebuilder confidence reached an all-time record low in October since the National Association of Homebuilders first began polling in January 1985.”

PRIMARY MORTGAGE MARKET SURVEY RESULTS

30-YEAR FIXED RATE MORTGAGES

15-YEAR FIXED RATE MORTGAGES

5/1 ADJUSTABLE RATE MORTGAGES (ARMs)

Margin                        2.74                2.72               2.75                2.77                2.78             2.73

1-YEAR ADJUSTABLE RATE MORTGAGES (ARMs)

Margin                        2.75                2.72               2.75                2.75                2.81             2.75

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.