U.S. Mortgage Rates Post Small Increases

by Amy Lillard

Mortgage rates rose slightly in the week ending September 20, 2007, according to finance company Freddie Mac. Their weekly Primary Mortgage Market Survey® was released Thursday.

"Mortgage rates were largely unchanged in the previous week, with long-term rates lingering at lower levels not seen since May," said Frank Nothaft, Freddie Mac vice president and chief economist. "The recent retreat in mortgage rates has brought in an increased volume of mortgage applications, according to the Mortgage Bankers Association, and pushed the share of applications for refinancing to the highest rate since April."

This week's survey indicates 30-year fixed mortgage rates averaged 6.34 percent, a gain from last week's average of 6.31 percent. Last year at this time, the 30-year fixed-rate mortgage averaged 6.40 percent.

Fixed mortgage rates for 15-year terms averaged 5.98 percent, a slight increase from last week's average of 5.97. A year ago, the 15-year fixed-rate mortgage averaged 6.06 percent.

Averages for Treasury-indexed adjustable-rate mortgages (ARMs) also posted small changes this week. Five-year ARMs averaged 6.21 percent, up from last week's average of 6.17 percent. At this time last year, the five-year ARM also averaged 6.08 percent.

One-year ARMs averaged 5.65 percent this week, down from last week's average of 5.66 percent. Last year, the one-year ARM averaged 5.54 percent.

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

"On Tuesday, the Fed announced a half-percentage-point cut to the Fed funds rate," said Nothaft. "In addition to bringing down short-term interest rates, the cut should also dissipate some of the volatility in short-term interest rates we observed earlier."

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.