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Mortgage Rates Near Record Lows

""Freddie Mac"":http://www.freddiemac.com released the results of its Primary Mortgage Market Survey (PMMS) today, in which the 30-year fixed-rate mortgage (FRM) averaged 4.98 percent (0.7 points) for the week ending March 19, 2009. That figure is down from last week when it averaged 5.03 percent. Last year at this time, the 30-year FRM averaged 5.87 percent. According to Freddie, the 30-year FRM has not been lower since January 15, 2009, when it hit an all-time low of 4.96 percent in Freddie Mac’s weekly survey.
Freddie reported that the 15-year FRM this week averaged 4.61 percent (0.7 points), down from last week's average of 4.64 percent. A year ago at this time, the 15-year FRM averaged 5.27 percent. According to Freddie Mac, the 15-year FRM has not been lower since the week ending June 13, 2003, when it was 4.60 percent.
""Bankrate"":http://www.bankrate.com, who also issues a weekly mortgage survey based on data provided by the top 10 banks and thrifts in the top 10 markets, reported similar drops in rates. According to Bankrate's study, 30-year FRMs among the nation's largest lenders averaged 5.29 percent this week. Although higher than the figure Freddie reported, it still represents a decline, down from 5.37 percent the week before. The 15-year FRM also inched lower, down to 4.86 percent from 4.88 percent last week, and the average jumbo 30-year fixed rate slid to 6.88 percent, Bankrate reported.
Mortgage rates have been flirting with record lows for several weeks now, and that was before the ""Federal Open Market Committee"":http://dsnews.comindex.php/home/news_story/2718 announced a substantial increase in the amount of debt purchases to take place this year - a move that is expected to lower rates even further.
In a statement released Wednesday afternoon, the Federal Reserve said it will purchase an additional $750 billion of mortgage-backed securities (MBS), as much as $100 billion more in debt issued by Fannie Mae and Freddie Mac, and up to $300 billion in long-term government debt. According to Bankrate, mortgage rates at once declined more than one-quarter percentage point in response. Even more significant than the immediate effect on mortgage rates is the intent of the Fed to keep mortgage rates low through the remainder of 2009, a critical factor in getting home buyers into the market to absorb the inventory of unsold and foreclosed homes.
Already, mortgage rates have dropped substantially since the peak of financial tensions five months ago. According to Bankrate's market date from leading lenders, the average 30-year FRM in mid-October was 6.74 percent, meaning a $200,000 loan would have carried a monthly payment of $1,295.87. Bankrate explained that with an average rate now of 5.29 percent, the monthly payment for the same size loan would be $1,109.37, a savings of $186 per month for a homeowner refinancing now.
According to Frank Nothaft, Freddie Mac's VP and chief economist, long-term mortgage rates this week followed bond yields lower for the second week in a row, and he too expects those figures to drop even further after the Fed's Wednesday announcement.
Nothaft explained, ""Following the March 18th Federal Reserve monetary policy statement, which announced further spending initiatives on financial assets, long-term bond yields plummeted. Yields on 10-year Treasury bonds fell by about a half percentage point after the announcement, marking the largest one-day decline since October 20, 1987.""
Freddie Mac also reported on this week's rates for hybrid adjustable-rate mortgages (ARMs). Five-year Treasury-indexed ARMs averaged 4.98 percent this week (0.7 points). A year ago, the 5-year ARM was 5.56 percent. One-year Treasury-indexed ARMs averaged 4.91 percent this week (0.7 points). According to Freddie, last year at this time, the 1-year ARM was 5.15 percent.

About Author: Carrie Bay

Carrie Bay is a freelance writer for DS News and its sister publication MReport. She served as online editor for DSNews.com from 2008 through 2011. Prior to joining DS News and the Five Star organization, she managed public relations, marketing, and media relations initiatives for several B2B companies in the financial services, technology, and telecommunications industries. She also wrote for retail and nonprofit organizations upon graduating from Texas A&M University with degrees in journalism and English.

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