Mortgage Interest Rate Survey - October 21, 2007
October 21st, 2007
In this week’s Mortgage Interest Rate Survey, Frank Nothaft, Freddie Mac vice president and chief economist said, “Both economic indicators and mortgage rates came in mixed this week. While retail sales were stronger in September, consumer confidence fell below market expectations in October. Moreover, both the core consumer price index and producer prices for September remained contained.”
Freddie Mac released its October 18, 2007 weekly results of the Primary Mortgage Market Survey® (PMMS®), with interest rates substantially holding compared to last week’s rates for the following programs:
* 30-year fixed-rate mortgage (FRM) averaged 6.4 percent with an average 0.6 point for the week ending October 19th, unchanged from last week when it averaged 6.40 percent. Last year at this time, the 30-year FRM averaged 6.36 percent.
* The 15-year FRM this week averaged 6.08 percent with an average 0.6 point, up from last week when it averaged 6.06 percent. A year ago, the 15-year FRM averaged 6.06 percent.
* Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 6.11 percent this week, with an average 0.5 point, down slightly from last week when it averaged 6.12 percent. A year ago, the 5-year ARM averaged 6.11 percent.
* One-year Treasury-indexed ARMs rose from 5.73 percent to 5.76 percent this week with an average 0.6 point. At this time last year, the 1-year ARM averaged 5.57 percent.
Frank Nothaft also noted that, “In his October 15th speech, Fed Chairman Bernanke suggested housing would be a ’significant drag’ on the economy going into the next year. Indeed, inventories of unsold homes remained exceptionally high. And October’s homebuilder confidence fell to the lowest level since 1985, when record keeping began.”
Interest rates started the year about 6.18% for the 30-yr FRM, and stayed low until mid-May when it started inching up to a high of 6.73 in mid-June and mid-July. Rates dropped again to a low of 6.31 by mid-September, but have increased slightly to 6.4 after the Fed’s cut in the Federal Funds rate from 5.25 to 4.75 on September 18th. Freddie Mac’s Compilation of Weekly Surveys shows the trend.
According to Lou Barnes of Boulder West Mortgage Credit News in his weekly commentary on the mortgage market, we are still in the same situation, “Two months after the initial grip of the Crunch, the word is out: there is no relaxation at all. We are in a two-part systemic event: several trillion dollars’ worth of trash lies where it was, value and ultimate disposition unknown; and worse, the impaired holders have dramatically reduced extension of new credit.”
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