European Debt Crisis Helps Keep Mortgage Rates Low

September 15, 2011 (Shirley Allen)

The concern over the European debt crisis caused investors to flee to the safety of Treasury bonds keeping yields low and sending mortgage rates to new lows according to Freddie Mac’s Primary Mortgage Market Survey® (PMMS).

Fixed Rate Mortgages (FRM):

Thirty year and the 15 year FRMs set new lows for another week with the 30 year FRM averaging 4.09 percent, with an average of 0.7 points, down from 4.12 percent the previous week. The 30 year FRM averaged 4.37 percent a year earlier.

The 15 year FRM averaged 3.30 percent this week with an average 0.6 points, down from 3.33 percent reported the previous week, and down from 3.82 percent a year ago.

Adjustable Rate Mortgages (ARM):

ARM interest rates were mixed this week with the 5-year Treasury-indexed hybrid ARM averaging 2.99 percent, up from last week’s all-time low of 2.96 percent, with an average of 0.6 points. The 5 year ARM averaged 3.55 percent a year earlier.

The 1-year Treasury-indexed ARM also reached a new low, averaging 2.81 percent this week with an average of 0.6 points, down from 2.84 percent the previous week. A year ago, the 1 year ARM averaged 3.40 percent.

Frank Nothaft, vice president and chief economist of Freddie Mac, stated, “Continued investor concerns over the state of the European debt markets kept U.S. Treasury bond yields low and allowed mortgage rates to ease once more this week. In comparison, the average interest rate of mortgages outstanding in the second quarter was 5.28 percent. By refinancing into today’s 30-year fixed mortgage, homeowners could shave almost $1,715 a year in interest payments on a $200,000 loan.”

“Apart from just fixed-rate mortgages, various other interest rates are at or near all-time historical lows as well. Both the 10-year constant-maturity Treasury bond and AAA-rated seasoned corporate bond yields were at 50-year lows over the week ending September 9th. In addition, the 1-year constant-maturity bill, a popular index for ARMs, hit its nadir over the week of September 2nd since data began in 1952,” he added.

30-Year Fixed Rate Mortgages US NE SE NC SW W
Average 4.09 4.11 4.16 4.12 4.13 4.01
Fees & Points 0.7 0.6 0.8 0.6 0.8 0.9

15-Year Fixed Rate Mortgages US NE SE NC SW W
Average 3.30 3.32 3.31 3.29 3.37 3.25
Fees & Points 0.6 0.7 0.8 0.4 0.7 0.6

5/1-Year Adjustable Rate Mortgages US NE SE NC SW W
Average 2.99 3.03 2.95 3.13 2.96 2.90
Fees & Points 0.6 0.6 0.6 0.4 0.8 0.6
Margin 2.74 2.75 2.75 2.72 2.76 2.73

1-Year Adjustable Rate Mortgages US NE SE NC SW W
Average 2.81 2.85 2.72 3.13 2.70 2.68
Fees & Points 0.6 0.7 0.6 0.5 0.6 0.5
Margin 2.76 2.80 2.75 2.72 2.77 2.75

The National Mortgage Rate Snapshot One Year Ago One Week Ago
  30-YR 15-YR 5/1-YR 1-YR ARM 30-YR 15-YR 5/1-YR 1-YR ARM
Average 4.37   3.82   3.55   3.40   4.12   3.33   2.96   2.84  
Fees & Points 0.7   0.6   0.6   0.7   0.7   0.6   0.6   0.6  
Margin N/A N/A 2.74   2.77   N/A N/A 2.74   2.76  

Tags: 15 year fixed, 30 year fixed, fixed rate mortgage, freddie mac, interest rates, mortgage rates, 5-year hybrid, 1-year treasury

Source:
Freddie Mac