Mortgage Rates Continue Recent Decline

Both Freddie Mac and the Mortgage Bankers Association (MBA) had good news for borrowers again this week. Both stated that mortgage rates on all but one of mortgage products they track were down - and down by double digits in some cases - from the previous week.

MBA had the best news. It reported that the average contract interest rate for 30-year fixed rate mortgages decreased by .12 percent from 5.95 to 5.83 percent for the week ending April 15 and that the 15-year fixed fared nearly as well, dropping from 5.51 percent to 5.40 percent. The 1-year ARM was also down modestly from 4.28 to 4.22 percent.

Freddie Mac's Weekly Primary Mortgage Market Survey showed smaller declines. The 30-year, the 15-year, and the 5/1 ARM each dropped .02 percent to 5.91, 5.46, and 5.33 percent respectively. Only the 1-year ARM bucked the trend. Freddie reported it increased from 4.23 percent to 4.30 for the week. Fees and Points remained at 0.7 for all products except the 1-year ARM which declined 0.1 to 0.6 for the week.

With all of the too-ing and fro-ing that has been going on since the first of the year, rates have actually made only slight gains. Freddie Mac's report for the week ending January 6, 2005 had the 30-year at 5.77, the 15-year at 5.21, and the 5/1 and 1-year ARMS at 5.03 and 4.10 percent respectively.

The US Labor Department announced on Wednesday that core consumer prices rose 0.4 percent in March, the fastest increase in that index in two and a half years. When energy prices and some other factors are added in, the overall Consumer Price Index increased by a seasonally adjusted 0.6 percent, the largest increase in that index since last October. However, this is not expected to have an immediate affect on interest rates - the Federal Reserve is still expected to raise the federal funds rate a modest .25 percent at its meeting on May 3.

MBA also reported that its mortgage application index was down 1.6 percent on a seasonally adjusted basis from the previous week and down 8.7 percent from the same week in 2004.

Both the refinance and the ARM shares of the total mortgage market continued to inch down. Refinances represented 38.0 of the total market compared to 38.1 the previous week and ARMs captured 35.4 percent of the market, down 0.4 from the week ended April 8.