U.S. mortgage rates fall for the fifth week
2006 still set to be third biggest year ever for overall home sales
By Amy Hoak, MarketWatch
Last Update: 12:08 PM ET Aug 24, 2006
CHICAGO (MarketWatch) -- U.S. mortgage rates dipped for the fifth straight week, according to Freddie Mac's weekly survey, released Thursday.
The Federal Reserve's acknowledgment that it is closely monitoring the housing market as it slows from last year's record pace is partially responsible for the trend, said Frank Nothaft, Freddie Mac's chief economist
"Although this fuels arguments about whether we will experience a soft landing or a bursting housing bubble, market watchers also perceive that it possible that the Fed may stop raising short-term interest rates over the near term. This perception takes upward pressure off mortgage rates," he said.
"Meanwhile, although both existing- and new-home sales for July fell below market expectations -- confirming the slowdown in the housing market -- we still expect 2006 to be the third highest year on record for total sales."
The 30-year fixed-rate mortgage averaged 6.48% for the week ending Aug. 24, according to the survey. It averaged 6.52% last week and 5.77% a year ago. This week marked the lowest level for the 30-year since the week ending April 6, when it averaged 6.43%.
The 15-year fixed-rate mortgage averaged 6.18% for the week, down slightly from its 6.20% average last week. That mortgage product averaged 5.35% a year ago. This week's average is the mortgage's lowest rate since April 20, when it averaged 6.17%.
Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 6.14% for the week, down from 6.18% the week before. The ARM averaged 5.30% a year ago.
One-year Treasury-indexed ARMs averaged 5.60% for the week, down from last week's 5.65% average. The ARM averaged 4.56% a year ago.
The 30-year and 15-year fixed loans required payment of an average 0.4 point to obtain the interest rate, the 5-year ARM required an average 0.5 point, and the 1-year ARM required an average 0.7 point. A point is 1% of the total loan amount, charged as prepaid interest.
The Mortgage Bankers Association's survey released Wednesday indicated that lower interest rates have been prompting homeowners to refinance their home loans. Applications for loans to purchase homes fell 1% over the week, but applications for refinancings rose 1.3%, according to the MBA. Refinance loans made up 40.6% of total applications, up from 39.6% in the previous week, the group reported.
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