Mortgage interest rates for the week ended January 24 continued
to fall and long term rates hit their lowest levels since the spring of 2004
according to the results of Freddie Mac's Primary Mortgage Market Survey for
the week ended January 24, 2008.
The survey showed that the 30-year fixed-rate mortgage (FRM) had an average
interest rate of 5.48 percent with 0.4 point during the week compared to an
average of 5.69 percent with 0.5 point a week earlier. One year ago the 30-year
FRM stood at 6.25 percent. The January 24 number was the lowest the 30-year
FRM has been since the week ended March 24, 2004 when it averaged 5.40 percent.
The 15-year FRM fell from 5.21 percent during the week ended January 17 to
an average of 4.95 percent, the lowest mark since the week ended April 1, 2004
when it averaged 4.84 percent. Fees and points were unchanged at 0.4. During
the same week in 2007 the 15-year averaged 5.98 percent.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMS) dropped
27 basis points to 5.13 percent from the previous week. Fees and points were
also down 0.2 to 0.4 point. The five-year hybrid was last seen at these levels
during the week ended June 30, 2005 when it averaged 5.06 percent, although
Freddie Mac only began reporting statistics for that product in January of 2005.
At the end of January last year the 5-year averaged 6.0 percent.
One-year Treasury-indexed ARMS also fell 27 basis points to an average of 4.99
percent with points unchanged at 0.6. This is the lowest the one-year has been
since October 27, 2005 when it averaged 4.91 percent. One year ago this product
was at 5.49 percent.
Frank Nothaft, Freddie Mac vice president and chief economist
issued a statement accompanying the survey results which was a bit downbeat.
"Economic news released last week," he said, "confirmed the weak condition of
the housing market. Housing starts fell further in December to 1.006 million
units, the slowest pace since May 1991. For the year as a whole, housing starts
dropped nearly 25 percent, from 2006's level. This was the largest annual decline
since 1980. New permits issued also fell to the lowest level since March 1993.
"When the Federal Reserve cut the target federal funds rate by three quarters
of a percentage point, the action was extraordinary in both the magnitude and
the timing of the rate cut: it is the largest cut since October 1984, and also
the first time in more than six years that the Fed took such action outside
of a scheduled Federal Open Market Committee meeting. The last time the Fed
decided to ease the target federal funds rate in an unscheduled meeting was
immediately after September 11, 2001. As a result, mortgage rates continued
trending down for the fourth consecutive week across loan products."
The Weekly Mortgage Applications Survey conducted by the Mortgage
Bankers Association (MBA) for the week ended January 25 strongly and surprisingly
contradicted Freddie Mac's findings. That survey found all three mortgage products
it tracks had rate increases for the week with the one-year ARM at a higher
average rate than either of the fixed-rate products for the second week in a
The 30-year FRM increased to 5.60 percent from 5.49 percent with points, including
the origination fee, dipping to 1.06 from 1.07.
The average contract interest rate for 15-year fixed-rate mortgages increased
to 5.04 percent from 4.96 percent, with points decreasing to 1.12 from 1.22.
The one-year ARM averaged 5.70 percent compared to 5.51 percent the previous
week with points decreasing to 0.97 from 1.01.
Mortgage application volume increased 7.5 percent on a seasonally adjusted
basis from a week earlier and 10.5 percent on an unadjusted basis. The volume
was 70.7 percent higher when compared with the same week one year earlier and
apparently much of the increase was due to a surge in refinancing. Applications
for the purpose of refinancing represented 73.0 percent of all applications
compared to 66.0 percent one week earlier. Adjustable rate mortgages on the
other hand dropped to an 8.6 market share from 9.3 percent the previous week.
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