Freddie Mac reported Thursday that 30-year Fixed Rate Mortgage (FRM), 15-year FRM, 5-year hybrid Adjustable Rate Mortgage (ARM) and 1-year ARM rates all fell this week. Freddie Mac’s conforming 1-year ARM is 5.15% down 6/10 of a percent from this time last year and nearly 2% below the non-conforming rate reported Wednesday by the Mortgage Bankers Association.
Freddie Mac’s chief economist attributed the drop in rates to news on lower consumer spending, but also noted some positive economic news that could reverse that trend and feed the housing market recovery:
Mortgage rates eased a bit over the holiday-shortened week…The economy grew at an upwardly revised 3.3 percent pace in the second quarter, boosted by the smallest trade deficit in eight years, and residential fixed investment slowed growth by 0.6 percent, the least amount since the same period a year ago.
Freddie Mac Conforming Rates At a Glance
- 30-year FRM: 6.35%, 0.7 point
- 15-year FRM: %, point
- 5-year hybrid ARM: %, point
- 1-year ARM: %, point
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If mortgage applications the last week are any indication, the housing market is ready to stabilize, if not actually bounce back, in late September and October. The Mortgage Banker’s Association reported a 10.5% increase (seasonally adjusted) in new applications for home purchase mortgages last week. The Purchase Index is down 18% compared to the September 5, 2007 mortgage applications report. Much of this may be due to the big increase (over half a percent) in Adjustable Rate Mortgage (ARM) rates compared to the same time last year; this is likely to present more of an issue for the high priced homes requiring jumbo loans than for more typical homes. The 30-year Fixed Rate Mortgage (FRM) rate and the 1-year ARM rate fell while the 15-year FRM rate rose; points fell for all terms.
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Average Mortgage Rates
30-year FRM: 6.39%, 1.00 points*
15-year FRM: 5.96%, 1.03 points
1-year ARM: 7.11%, 0.35 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%.
Technorati Tags: housing market, mortgages, mortgage market, mortgage rates, subprime
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Freddie Mac reported Thursday that 30-year and 15-year Fixed Rate Mortgage (FRM) and 5-year hybrid Adjustable Rate Mortgage (ARM) rates fell this week, while 1-year ARM rates rose slightly.
Freddie Mac chief economist attributed the drop in long term rates to signs of weakness in economic indicators last week, but noted that there were promising signs in housing markets and that:
ARM rates, on the other hand, rose slightly after the Federal Reserve’s Open Market Committee hinted it might increase the overnight bank lending rate in its August 5th minutes.
That hint may carry even more significance after today’s Gross Domestic Product (GDP) report from the Bureau of Economic Analysis showed that the economy grew at a 3.3% annual rate in the 2nd quarter – nearly twice as fast as the initial estimate and a rate that would be characterized as strong growth by most analysts.
Freddie Mac Conforming Rates At a Glance
- 30-year FRM: 6.4%, 0.6 point
- 15-year FRM: 5.93%, 0.6 point
- 5-year hybrid ARM: 6.03%, 0.6 point
- 1-year ARM: 5.33%, 0.7 point
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The housing market got a bit more good news this week with a small increase in mortgage applications and a small drop in the average 30-year Fixed Rate Mortgage (FRM) rate and points paid. The 15-year Fixed Rate Mortgage rate fell, but points paid increased; the 1-year Adjustable Rate Mortgage (ARM) rate and points did the opposite. Purchase mortgage applications rose 0.6% with the pattern of increasing FHA applications continuing.
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Average Mortgage Rates
30-year FRM: 6.44%, 1.03 points*
15-year FRM: 5.94%, 1.13 points
1-year ARM: 7.15%, 0.36 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%.
Technorati Tags: housing market, mortgages, mortgage market, mortgage rates, subprime
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Though the news has focused on some negatives in the housing statistics out early this week, the overall picture is looking better than it has for several months. First, both major sales indicators improved this month with a 2.% increase in new home sales and a 3.1% increase in existing home sales.
Inventories improved for new homes, largely due to the increase in sales, but rose for existing homes as more homes came on the market.
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Prices were a negative with a tiny drop ($300) in the median new home price and a small drop ($2,700 or less than 1%) in the median existing home price. The Case-Shiller Index is still declining, but it is limited to prices 20 large metropolitan markets and has fairly limited application to other markets. The small drops in prices combined with improvements in consumer confidence and other factors should help alleviate the inventory glut, so homeowners who have a two to three year horizon before they will consider selling should see the market turn around in plenty of time. Meanwhile, buyers looking for the bottom should start looking at the best bargains available over the next few months.
Technorati Tags: existing home sales, new home sales, Case-Shiller, home prices, housing prices, home sales
Read more for the full releases on New and Existing Home Sales and the Case-Shiller Index…
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