Mortgage Rates Drop Slightly

Mortgage rates fell only slightly last week, accoding to a weekly survey release Thursday morning by Freddie Mac (FRE: 0.65 +1.56%). The average rate fo a 30-year fixed-rate mortgage fell 4 basis points to 6.01 percent with an average 0.6 point for the week ended May 15, down from one week earlier when it averaged 6.05 percent. Last year at this time, the 30-year FRM averaged 6.15 percent, Freddie Mac said.

Rates of 15-year fixed-rate mortgage averaged 5.60 percent, unchanged from last week.

Five-year Treasury-indexed hybrid adjustable-rate mortgages moved a bit more substantially, dropping 10 basis points to an average of 5.57 percent this week; one year ago, the 5-year ARM averaged 5.89 percent.

“Recent remarks by Federal Reserve officials, which partly bolstered optimism that financial markets will recover later this year, helped mortgage rates ease up a little this week,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Fed Chairman Bernanke indicated in a speech on May 13th that the Fed stands ready to continue to add liquidity to the markets. On the same day, San Francisco Fed bank president Janet Yellen added that she anticipates inflation will slow as commodity prices level off in the second half of the year.

“Despite the bleak housing market, there was positive news on the overall state of the economy. Retail sales, excluding automobiles, rose 0.5 percent in April, over twice that of market forecasts, and there was a significant upward revision in March’s figures as well. Also, the consumer price index for April rose less than expected, allaying some market concerns of inflation taking hold.”

For more information, visit http://www.freddiemac.com.

Disclosure: The author held no positions in FRE when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.