After holding steady for two weeks straight, mortgage rates fell to their lowest level in six weeks for the week ending May 6, 2010, ""Freddie Mac"":http://www.freddiemac.com/ and ""Bankrate"":http://www.bankrate.com/ reported Thursday.[IMAGE]
According to Freddie Mac's Primary Mortgage Market Survey (PMMS), 30-year fixed-rate mortgages averaged 5 percent with an average 0.7 point this week, down from 5.06 percent last week but still above last year at this time when rates averaged 4.84 percent.
Freddie Mac also reported a drop in 15-year fixed-rate mortgages, which averaged 4.36 percent with an average 0.7 point this week. Rates decreased slightly from last week's average of 4.39 percent and were notably lower than a year ago at this time when 15-year fixed-rate mortgages averaged 4.51 percent.
The story was the same for adjustable-rate mortgages (ARMs). According to the PMMS, 5-year Treasury-indexed hybrid ARMs averaged 3.97 percent with an average 0.7 point this week, down from 4 percent a week earlier. In addition, 1-year Treasury-indexed ARMs averaged 4.07 percent with an averaged 0.6 point this week, down from last week's average of 4.25 percent.
""Treasury bond and note yields declined this week, and rates on fixed-rate mortgages and hybrid ARMs followed suit,"" said Frank Nothaft, Freddie Mac VP and chief economist. ""Rates for both the 30-year and 15-year fixed-rate mortgages were the lowest in six weeks; initial rates on 5/1 hybrid ARMs hit an all-time low since they were added to the survey in the beginning of 2005.""
Bankrate reported the same trend, pointing to European debt worries as the catalyst for this week's decline in rates.
""The idea that countries an ocean away having trouble repaying their debts could translate into lower mortgage rates here probably sounds pretty Greek to most people. But when investors get nervous, like they are now, they gravitate to safer investments,"" Bankrate explained. ""Those safer investments are securities issued by the U.S. government, to which mortgage rates are closely related. Whenever the nervousness subsides, mortgage rates will move back up.""
According to the company's weekly national survey, 30-year fixed-rate mortgages fell to 5.12 percent with an average 0.47 point this week, down from 5.21 percent last week. In addition, Bankrate said 15-year fixed-rate mortgages stepped down to 4.49 percent with an average 0.44 point, a dip from last week's average of 4.54 percent.
The tracking company also said ARMs were mostly lower, as the average rate for 3-year ARMs dropped to 4.52 percent and 5-year ARMs sank to 4.31 percent.
Bankrate's survey is complemented by its weekly Rate Trend Index, in which mortgage experts predict which way rates are headed over the next week. Nearly half of the panelists Ã¢â‚¬" 47 percent Ã¢â‚¬" said mortgage rates will rebound and move higher in the next seven days, and just 18 percent predicted a further decline. The remaining 35 percent said rates will remain more or less unchanged over the next week.