Mortgage Rates Ease for Fourth Straight Week

Both long and short term interest rates dropped slightly last week according to Freddie Mac's Primary Mortgage Market Survey for the week ended November 8.

The 30-year fixed-rate mortgage (FRM) averaged 6.24 percent with an average 0.4 point for the week compared with 6.26 and 0.4 point the week before. This is, like last week, the lowest the 30-year FRM has been since the week ended May 17, 2007 when it averaged 6.21 percent. One year ago this week the 30-year mortgage averaged 6.33 percent.

The other long-term obligation, the 15-year FRM, averaged 5.90 percent compared to a slightly higher 5.91 percent a week earlier. Fees and points did edge up to 0.5 point from 0.4. This is the lowest for the 15-year since May 10 when it averaged 5.87 percent. One year ago the average rate was 5.91 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) carried a mean contract interest rate of 5.89 percent in the most recent week with 0.5 point. This is a more significant change than the long-term loans showed; one week ago the five-year hybrid was at 5.98 percent with 0.4 point. One year ago this rate stood at 6.08 percent and last week's average was the lowest level for the hybrid since it was at 5.89 percent during the week ended May 10.

One-year Treasury-indexed ARMs averaged 5.50 percent with a 0.6 point, down from last week when it averaged 5.57 percent. At this time last year, the 1-year ARM averaged 5.55 percent. The 1-year ARM has not been this low since the week ending May 17, 2007, when it averaged 5.48 percent.

"Reports of weaker consumer spending in September and a decline in manufacturing activity in October kept mortgage rates at bay this week," said Frank Nothaft, Freddie Mac vice president and chief economist. "Rates for long-term mortgages were little changed while rates for ARMs fell following the Federal Reserve's interest-rate cut.

"With mortgage rates remaining low, approximately 38 percent of applications were for refinance transactions in the third quarter, down from 42 percent in the second quarter of this year. According to Freddie Mac's third quarter cash-out refinance report; approximately 87 percent of refinanced loans were for loan amounts that were 5 percent or more higher than the original balances. In addition, Freddie Mac estimates that families withdrew approximately $60 billion in home equity over the same quarter, down from about $81 billion in the second quarter of 2007."

The Mortgage Bankers Association (MBA) Weekly Mortgage Applications Survey for the week ended November 9, 2007 was slightly less consumer friendly.

The survey pegged the average contract interest rate for 3-year FRMs at 6.19 percent, up three basis points from the previous week with points, including the origination fee increasing from 1.08 to 1.16.

The 15-year FRM was unchanged at 5.77 percent but points increased from 1.10 to 1.13 while the one-year ARM rose from 5.94 percent to 5.98 with points going from 0.90 to 0.93. All figures are for 80 percent loan to value originations.

Loan application volume increased 5.5 percent on a seasonally adjusted basis from the previous week and 4.2 percent unadjusted. Applications were up 21.8 percent from the same week in 2006.

Refinancing as a share of all applications rose to 50.2 percent from 49.1 percent the previous week and even the market share of adjustable rate mortgages increased, reaching 15.5 percent from 14.2 percent of all applications one week earlier.