Mortgage Rates Set Another Record Low

Interest rates for both 30-year and 15-year fixed rate mortgages (FRMs) hit another record low this week, according to the ""Primary Mortgage Market Survey"":http://www.freddiemac.com/pmms/release.html (PMMS) released on Thursday by ""Freddie Mac"":http://www.freddiemac.com.
The GSE said that for the week ending March 26, 2009, the 30-year FRM averaged 4.85 percent (0.7 point). The 30-year interest rate has not been lower in the life of Freddie Mac’s weekly survey, which dates back to 1971. Last week 30-year FRMs averaged 4.98 percent, and last year at this time, they were 5.85 percent. Rates for 30-year FRMs peaked last year at 6.63 percent on July 24th.
Frank Nothaft, Freddie Mac's VP and chief economist, noted that the Federal Reserve’s plans to purchase Treasury securities over the next six months caused bond yields to drop and mortgage rates followed. According to Nothaft, ""With this week's 30-year FRM, the interest rate difference is almost 2 percentage points, which amounts to a savings of about $225 in monthly mortgage payments for a $200,000 loan.""
Nothaft added, ""Potential home buyers are taking notice of these historically low mortgage rates. Both new and existing home sales rose 5 percent in February. First-time home buyers accounted for half of all existing home sales, according to the National Association of Realtors. In addition, mortgage applications for home purchases consecutively rose over the first three weeks in March, based on figures published by the Mortgage Bankers Association.""
The 15-year FRM this week averaged 4.58 percent (0.7 point), down from last week when it averaged 4.61 percent. A year ago at this time, the 15-year FRM averaged 5.34 percent. This week's rate is the lowest the 15-year FRM has ever been in the life of Freddie Mac’s weekly survey, which dates back to 1991 for the 15-year FRM.
According to Freddie's survey, five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 4.96 percent this week (0.7 point). Last week the 5-year ARM was 4.98 percent, and a year ago it averaged 5.67 percent. The 5-year ARM also hit an all-time low, dating back to 2005 when the GSE began including it in its weekly surveys.
One-year Treasury-indexed ARMs averaged 4.85 percent this week (0.6 point), down from last week when it averaged 4.91 percent. At this time last year, the 1-year ARM averaged 5.24 percent.
The ""Federal Housing Finance Agency"":http://www.fhfa.gov (FHFA) also released its report today on ""average interest rates"":http://www.fhfa.gov/webfiles/1976/MAR_MIRS_Mar_2009_final.pdf during the month of February. The GSEs' conservator said average rates for conventional 30-year fixed-rate mortgage loans of $417,000 or less decreased 6 basis points to 5.03 percent in February. The average interest rate on 15-year FRMs of $417,000 or less dropped 19 basis points to 4.92 percent last month.
The rates FHFA reported were calculated from its Monthly Interest Rate Survey (MIRS) of purchase-money mortgages and reflect loans closed during the February 23-28 period. Typically, FHFA explained, the interest rate is determined 30 to 45 days before the loan is closed, thus the reported rates depict market conditions prevailing in mid- to late January.
The report contained no data on adjustable-rate mortgages due to insufficient sample size, the agency said, but FHFA reported that the contract rate on the composite of all mortgage loans (fixed- and adjustable-rate) was 5.03 percent in February, down from 5.11 percent in January. The effective interest rate, which reflects the amortization of initial fees and charges, was 5.12 percent in February, down from 5.20 percent in January.
According to FHFA's survey, initial fees and charges were 0.57 percent of the loan balance in February, down 0.07 percent from 0.64 in January. Forty-seven percent of the purchase-money mortgage loans originated in February were ""no-point"" mortgages, up from forty-one percent in January, the agency said.
The average term in February was 28.1 years, down from 28.4 in January. FHFA reported that the average loan-to-price ratio in February was 74.4 percent, down from 75.2 percent in January, and the average loan amount decreased by $2,600 to $208,900 in February.
The ""National Average Contract Mortgage Rate"":http://www.fhfb.gov for the purchase of previously occupied homes by combined lenders, used as an index in some ARM contracts, was 5.04 percent based on loans closed in February. This is a decrease of 0.08 percent from the previous month.