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Both the Mortgage Bankers Association and Freddie Mac reported a drop in Fixed Rate Mortgage (FRM) rates in their latest surveys, with Freddie Mac reporting an increase in 1-year Adjustable Rate Mortgage (ARM) rates and the Mortgage Bankers Association reporting a drop. The Mortgage Bankers Association also reported that new mortgage applications rose last week, 9% for purchases and 16% for refinances.

Freddie Mac’s chief economist attributed the drop in rates to signs that the overall economy is weakening and noted that

the actions of the Fed in recent weeks to assist commercial paper markets appear to be thawing part of the credit freeze that has gripped capital markets in the U.S., giving banks some breathing room. This is the second week that rates have come down for fixed-rate mortgages

Average Mortgage Rates from the Mortgage Bankers Association

30-year FRM: 6.24%, 1.17 points*
15-year FRM: 5.9%, 1.12 points
1-year ARM: 6.77%, 0.43 points

Average Mortgage Rates from Freddie Mac

30-year FRM: 6.14%, 0.7 points
15-year FRM: 5.81%, 0.7 points
5-year Treasury Indexed hybrid ARM: 5.98%, 0.6 points
1-year ARM: 5.33%, 0.5 points

* Points reported by Mortgage Bankers Association in this survey include origination fees as well as traditional discount points. Average rates are based on an 80% LTV loan. This means a loan amount no more than 80% of the property value as determined by the lower of the purchase price or appraised value. Typically this means a 20% down payment, though an 80% loan can also be achieved with a second mortgage carried by the seller or a third party lender for the difference between the actual down payment and 20%.

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Mortgage Applications Increase In Latest MBA Weekly Survey

WASHINGTON, D.C. (November 13, 2008) — The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending November 7, 2008.  The Market Composite Index, a measure of mortgage loan application volume, was 425.0, an increase of 11.9 percent on a seasonally adjusted basis from 379.9 one week earlier.  On an unadjusted basis, the Index increased 10.5 percent compared with the previous week and was down 40.0 percent compared with the same week one year earlier.
The Refinance Index increased 16.1 percent to 1248.4 from the previous week and the seasonally adjusted Purchase Index increased 9.0 percent to 284.4 from one week earlier.  The Conventional Purchase Index increased 6.5 percent while the Government Purchase Index (largely FHA) increased 15.3 percent.
 
The four week moving average for the seasonally adjusted Market Index is down 3.7 percent.  The four week moving average for the seasonally adjusted Purchase Index is down 2.5 percent, while this average is down 5.1 percent for the Refinance Index.
The refinance share of mortgage activity increased to 45.1 percent of total applications from 42.9 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 2.3 percent from 2.5 percent of total applications from the previous week.
The average contract interest rate for 30-year fixed-rate mortgages decreased to 6.24 percent from 6.47 percent, with points decreasing to 1.17 from 1.19 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 5.90 percent from 6.14 percent, with points decreasing to 1.12 from 1.22 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for one-year ARMs decreased to 6.77 percent from 6.86 percent, with points increasing to 0.43 from 0.42 (including the origination fee) for 80 percent LTV loans.

MORTGAGE RATES DOWN FOR SECOND WEEK RUNNING
McLean, VA – Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 6.14 percent with an average 0.7 point for the week ending November 13, 2008, down from last week when it averaged 6.20 percent. Last year at this time, the 30-year FRM averaged 6.24 percent.
The 15-year FRM this week averaged 5.81 percent with an average 0.7 point, down from last week when it averaged 5.88 percent. A year ago at this time, the 15-year FRM averaged 5.88 percent.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.98 percent this week, with an average 0.6 point, down from last week when it averaged 6.19 percent. A year ago, the 5-year ARM averaged 5.96 percent.
One-year Treasury-indexed ARMs averaged 5.33 percent this week with an average 0.5 point, up from last week when it averaged 5.25 percent. At this time last year, the 1-year ARM averaged 5.50 percent.
(Average commitment rates should be reported along with average fees and points to reflect the total cost of obtaining the mortgage.)
“Long-term mortgage rates fell slightly this week as signs the overall economy is weakening brought interest rates down market-wide,” said Frank Nothaft, Freddie Mac vice president and chief economist. “In addition, the actions of the Fed in recent weeks to assist commercial paper markets appear to be thawing part of the credit freeze that has gripped capital markets in the U.S., giving banks some breathing room. This is the second week that rates have come down for fixed-rate mortgages.
“Mortgage applications for home purchase loans fell during the final week in October to the slowest pace since the week of December 29, 2000, based on figures published by the Mortgage Bankers association. Meanwhile, the National Association of Realtors® (NAR) reported that pending existing home sales fell 4.6 percent in September, below the market consensus; however, the index was 1.6 percent above that of the same period last year.”