Fixed Mortgage Rates Hold Steady; Adjustable Rates Fall Sharply
During a week when mortgage applications took a nose dive, average mortgage rates tended to hold tight as inflation concerns dominated bond investors' attention. According to a weekly rate survey compiled by Freddie Mac (FRE), rates for a 30-year fixed-rate mortgage averaged 6.09 percent with an average 0.6 point for the week ended June 5 -- up only one basis point from last week. Rates remain higher than one-year ago, however: the GSE said that the 30-year FRM average 6.53 percent at this time last year. "Interest rates for fixed-rate mortgages were nearly unchanged this week over reports of continued inflation," said Frank Nothaft, Freddie Mac vice president and chief economist. "Although the gross domestic product grew at a faster rate in the first quarter than originally reported, consumer spending rose only 1 percent, representing the smallest increase since the 2001 recession. "In addition, the core price deflator was revised downward to an annualized rate of 2.1 percent and remained at that pace in April, but this is still above the Federal Reserve’s stated comfort zone." While fixed-rate mortgages held steady, adjustable-rate mortgages saw rates move downward. Five-year Treasury-indexed hybrid ARMs averaged 5.51 percent this week, Freddie said, down 11 basis points from last week. One year ARMs indexed to Treasuries also fell sharply to 5.06 percent, 16 basis points lower than one week earlier. The lower ARM rates may translate into increased refinancing activity, some lending executives suggested to Housing Wire Thursday morning. 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.