Mortgage Rates Set Another New Low
Mortgage rates are on a roll -- downward, that is -- for the tenth consecutive week, Freddie Mac (FRE) reported Wednesday. 30-year fixed-rate mortgages averaged a shockingly low 5.01 percent with an average 0.6 point this week, down from 5.10 percent last week and 5.87 percent a year ago. “Interest rates for 30-year fixed-rate mortgages fell for the tenth week to a fourth consecutive record low due in part to the Federal Reserve’s recent purchases of mortgage-backed securities issued by Freddie Mac, Fannie Mae and Ginnie Mae,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Since the end of October 2008, these rates have declined by almost 1 1/2 percentage points, or payment savings of about $184 a month for a $200,000 loan. – an additional $11 dollars from last week.” Rates on 15-year fixed-rate mortgages also eased, averaging 4.62 percent with an average 0.7 point, down from last week's 4.83 percent average, according to the GSE's weekly survey. And five-year Treasury-indexed ARMS fell from 5.57 percent last week to 5.49 percent. One-year Treasury-indexed ARMS actually rose to 4.95 percent from 4.85 percent last week. Bankrate.com's weekly mortgage rate survey also reported a drop in mortgage rates. The benchmark 30-year fixed-rate, according to Bankrate, fell 31 basis points to 5.33 percent. The average 15-year fixed-rate mortgage also fell 31 basis points to 4.85 percent. Bankrate's Holden Lewis said in his mortgage analysis report that the Federal Reserve's move to promise a "shopping spree for mortgage backed securities" last week, has indeed played a role in rates. "Think of the Fed as an extremely deep-pocketed bank, competing with other banks to provide money for mortgages," Holden said. "When banks compete, you win: Rates go lower." Write to Kelly Curran at email@example.com. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.