U.S. Mortgage Rates Fall, Help Borrowers with Resetting ARMs

by Amy Lillard

Mortgage rates fell steeply in the week ending September 13, 2007, according to finance company Freddie Mac. Their weekly Primary Mortgage Market Survey® was released Thursday.

"Interest rates on prime conforming loans fell across the board in the past week, with rates on 30-year fixed rate mortgages averaging 0.15 percentage points below the previous week's level", said Frank Nothaft, Freddie Mac vice president and chief economist. "The drop in mortgage rates may give some relief to borrowers who are looking to refinance or purchase a home. As a matter of fact, all the mortgage products in Freddie Mac's survey this week were lower than they were at the same time last year."

This week's survey indicates 30-year fixed mortgage rates averaged 6.31 percent, a big drop from last week's average of 6.46 percent. Last year at this time, the 30-year fixed-rate mortgage averaged 6.43 percent. (current rate quotes on 40 year fixed rate mortgage)

Fixed mortgage rates for 15-year terms averaged 5.97 percent, another deep decrease from last week's average of 6.15. A year ago, the 15-year fixed-rate mortgage averaged 6.11 percent.

Averages for Treasury-indexed adjustable-rate mortgages (ARMs) also posted steep declines this week. Five-year ARMs averaged 6.17 percent, down from last week's average of 6.32 percent. At this time last year, the five-year ARM also averaged 6.10 percent.

One-year ARMs averaged 5.66 percent this week, a drop from last week's average of 5.74 percent. Last year, the one-year ARM averaged 5.60 percent.

Freddie Mac said that to obtain these rates lenders charged varied point fees. For 30-year fixed-rate mortgages, an average 0.5-point fee was charged, while 15-year mortgages included an average 0.4-point fee. For ARMs, lenders charged a 0.6-point fee for five-year terms and a 0.8-point fee for one-year terms.

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.