Mortgage Rates Down Again - Some Changes Significant
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Freddie Mac and the Mortgage Bankers Association were, for a change, unanimous
in agreeing that mortgage interest rates retreated the past
week.
Freddie Mac released its Weekly Primary Mortgage Market Survey for the week
ended September 21. The 30-year fixed-rate mortgage retreated from 6.43 percent
the previous week to 6.40 percent with fees and points unchanged at 0.5. The
same week in 2005 this product averaged 5.80 percent.
The 15-year fixed-rate mortgage declined 5 basis points from
the previous week, averaging 6.06 percent. Fees and points increased from 0.4
to 0.5. During this September week in 2005 the 15-year fixed-rate mortgaged
averaged 5.37 percent.
The average contract rate for Treasury-indexed 5/1 year ARMs was 6.08 compared
to 6.10 during the week ended September 14 and 5.31 percent one year ago. Fees
and points were down from 0.6 to 0.5.
The rate for 1-year ARMs averaged 5.54 percent, down 6 basis points from the
week before but fees and points were up to 0.8 from 0.7. This equals the highest
fee/point pricing for this index over the last year. The interest rate one year
ago was 4.48 percent.
Frank Nothaft, Freddie Mac vice president and chief economist stated, "a
slowing housing market
and signs that inflation is leveling off have helped to lower mortgage rates
lately and keep them more affordable. For example, housing starts dropped to
a three-year low in August and the Producer Price Index (PPI) fell below market
expectations. Going forward, the economy is expected to expand at a somewhat
slower rate than it did in the first half of the year. This should continue
to keep inflation in check, and therefore, mortgage rates low."
The Mortgage Bankers Association's Weekly Mortgage Applications Survey
for the week ending September 22 not only reported that mortgage rates had declined
but that fixed-rate mortgages had dropped dramatically.
The average contract interest rate for 30-year
fixed rate mortgages in this survey fell 18 basis points to 6.18 percent.
Points, including the origination fee were also down from 1.11 to 1.06.
Average contract rates for the 15-year fixed-rate loan decreased from 6.04
percent during the week ended September 15 to 5.81 percent although points did
increase from 1.06 to 1.12.
The change in the one-year ARM was not quite as notable but still 5 basis points
are 5 basis points. The adjustable averaged 5.90 compared to 5.95 the previous
week with points increasing slightly from 0.77 to 0.79. The spread between the
30-year fixed rate and the one-year ARM is 28 basis points. This is the smallest
the differential has been since January 2001.
All reported rates are for 80 percent loan to value originations.
Mortgage application volume was down 4.9 percent on a seasonally
adjusted basis and 5.4 percent on an unadjusted basis from one week earlier
and was 21.1 percent lower than the same week in 2005.
Refinancing as a share of all mortgage activity increased to 44.3 percent from
43.7 percent the previous week and ARM applications were down from 27 percent
to 26.4.
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