Mortgage Rates Week Ending July 12, 2007

by Amy Lillard

U.S. Mortgage Rates Boosted by Employment and Credit Growth

Rates increased for most mortgages in the week ending July 12, 2007, according to finance company Freddie Mac. Their weekly Primary Mortgage Market Survey® was released Thursday.

"A favorable employment report for June and robust consumer credit growth for May pushed long-term mortgage rates higher in the past week, nearly eliminating the declines made in rates over the previous three weeks," said Frank Nothaft, Freddie Mac vice president and chief economist. "In addition, consumer credit jumped by $12.9 billion in May, almost double market expectations."

This week's survey indicates 30-year fixed mortgage rates averaged 6.73 percent, a jump from last week’s average of 6.63 percent. Last year at this time, the 30-year fixed-rate mortgage averaged 6.74 percent.

Fixed mortgage rates for 15-year terms averaged 6.39 percent, an increase from last week's average of 6.30. A year ago, the 15-year fixed-rate mortgage averaged 6.37 percent.

Averages for some adjustable-rate mortgages (ARMs) also jumped up this week. Five-year ARMs averaged 6.35 percent this week, up from last week’s average of 6.29 percent. At this time last year, the five-year ARM averaged 6.33 percent.

One-year ARMs averaged 5.71 percent this week, unchanged from last week's average of 5.71 percent. Last year, the one-year ARM averaged 5.75 percent.

Freddie Mac said that to obtain these rates lenders charged an average 0.4-point fee for fixed-rate mortgages, and a 0.5-point fee for ARMs.

"Our July economic outlook forecasts 30-year fixed-rates to stay around their current level through the end of year," said Nothaft. "The refinance share of loan applications is expected to continue decreasing throughout the same time frame, averaging about 35 percent in 2007, the lowest level since 2000. Freddie Mac expects weakness in the housing market to persist in the second half of the year, with 2007 total home sales and housing starts hitting 5-year lows."

Freddie Mac is a mortgage finance company established by Congress in 1970. The company buys mortgages and mortgage-related securities and packages them to sell to investors or to hold in its own portfolio. They release their summary of average mortgage rates weekly.