Lower US Mortgage Rates Translate into Large Volume of Refinancing

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 5.16 percent with an average 0.7 point for the week ending February 12, 2009, down from last week when it averaged 5.25 percent.  Last year at this time, the 30-year FRM averaged 5.72 percent.

The 15-year FRM this week averaged 4.81 percent with an average 0.7 point, down from last week when it averaged 4.92 percent.  A year ago at this time, the 15-year FRM averaged 5.25 percent. 

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.23 percent this week, with an average 0.6 point, down from last week when it averaged 5.26 percent.  A year ago, the 5-year ARM averaged 5.19 percent. 

One-year Treasury-indexed ARMs averaged 4.94 percent this week with an average 0.5 point, upfrom last week when it averaged 4.92 percent.  At this time last year, the 1-year ARM averaged 5.00 percent. 

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

“Interest rates for 30-year fixed-rate mortgages are almost 1.5 percentage points below 2008’s peak set on July 24, 2008, offering many homeowners an incentive to refinance,” said Frank Nothaft, Freddie Mac vice president and chief economist.  “This would translate into a monthly payment savings of around $188 on a $200,000 mortgage.

“The Bureau of Economic Analysis estimated that the weighted average mortgage rate of loans outstanding was about 6.2 percent in the fourth quarter of 2008.  As a result, the share of refinancing among the total number of conventional mortgage applications has exceeded 50 percent for the past 11 weeks and averaged 80 percent over this period, according to the Mortgage Bankers Association.”

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than five million renters.

PRIMARY MORTGAGE MARKET SURVEY RESULTS

30-YEAR FIXED RATE MORTGAGES

15-YEAR FIXED RATE MORTGAGES

5/1 ADJUSTABLE RATE MORTGAGES (ARMs)

Margin                        2.74                2.73               2.75                2.75                2.77             2.73

1-YEAR ADJUSTABLE RATE MORTGAGES (ARMs)

Margin                        2.75                2.75               2.75                2.73                2.79             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.