U.S. Mortgage Rates Drop after Jobs, Unemployment Reports

by Amy Lillard

Fixed-rate mortgage rates dropped in the week ending August 9, 2007, according to finance company Freddie Mac. Their weekly Primary Mortgage Market Survey® was released Thursday.

"Interest rates on prime conforming fixed-rate mortgages eased further in the past week, according to the Primary Mortgage Market Survey, even though other sources such as HSH Associates reported that jumbo fixed rates increased by a quarter percent or more last week," said Frank Nothaft, Freddie Mac vice president and chief economist. "Job creation fell short of market expectations, with 92,000 jobs added in July, the smallest gain since February, and June's number was revised down by 6,000. In addition, the unemployment rate ticked up for the first time in four months to 4.6 percent.

This week's survey indicates 30-year fixed mortgage rates averaged 6.59 percent, a plunge from last week's average of 6.68 percent. Last year at this time, the 30-year fixed-rate mortgage averaged 6.55 percent.

Fixed mortgage rates for 15-year terms averaged 6.25 percent, a drop from last week's average of 6.32. A year ago, the 15-year fixed-rate mortgage averaged 6.20 percent.

Averages for adjustable-rate mortgages (ARMs) bucked the trend and rose this week. Five-year ARMs averaged 6.33 percent this week, up from last week's average of 6.29 percent. At this time last year, the five-year ARM also averaged 6.21 percent.

One-year ARMs averaged 5.65 percent this week, an increase from last week's average of 5.59 percent. Last year, the one-year ARM averaged 5.69 percent.

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

"Freddie Mac reported that the amount of home equity cashed out through refinancing totaled $76.7 billion in the second quarter," said Nothaft. "Although slightly higher than the previous quarter's level, it still reflected a drop of $24.5 billion compared to the same quarter last year. Both the tightening of underwriting standards and slackening house price appreciation are possible contributing factors to the decline."

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.