U.S. Mortgage Rates Up and Down

by Amy Lillard

Long-term mortgage rates dropped in the week ending August 30, 2007, according to finance company Freddie Mac. Their weekly Primary Mortgage Market Survey® was released Thursday.

"Interest rates on conforming long-term fixed-rate mortgages declined slightly, while rates on one-year adjustable rate mortgages increased by about a quarter of a percent," said Frank Nothaft, Freddie Mac vice president and chief economist. "The increase in ARM rates is consistent with movement of the yields on short-term Treasury securities, which have exhibited higher volatility recently due to market uncertainties."

This week's survey indicates 30-year fixed mortgage rates averaged 6.45 percent, a drop from last week's average of 6.52 percent. Last year at this time, the 30-year fixed-rate mortgage averaged 6.44 percent.

Fixed mortgage rates for 15-year terms averaged 6.12 percent, a decrease from last week's average of 6.18. A year ago, the 15-year fixed-rate mortgage averaged 6.14 percent.

Averages for Treasury-indexed adjustable-rate mortgages (ARMs) bucked the trend and increased this week. Five-year ARMs averaged 6.35 percent, up slightly from last week's average of 6.34 percent. At this time last year, the five-year ARM also averaged 6.11 percent.

One-year ARMs averaged 5.84 percent this week, a big jump from last week's average of 5.60 percent. Last year, the one-year ARM averaged 5.59 percent.

Freddie Mac said that to obtain these rates lenders charged an average 0.5-point fee for fixed-rate mortgages. Lenders charged a 0.6-point fee for five-year ARMs, and a 0.8-point fee for one-year ARMs.

"In other news, new home sales defied consensus expectations and rose in July to 870 thousand units, led by a 22 percent increase in the Western region," said Nothaft. "Existing home sales fell, however, though by less than the market had forecasted, to 5.75 million units, with the decline limited to the Midwest region."

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.