Falling Treasury Yields Take Mortgage Rates with Them

July 14, 2011 (Shirley Allen)

Ten-year Treasury Bonds dropped to under 3 percent and the weak employment report pushed mortgage interest rates down this week according to Freddie Mac’s Primary Mortgage Market Survey® (PMMS) as Treasury yields ended the week higher following the end of the Federal Reserve’s monetary easing policies.

Fixed Rate Mortgages (FRM):

Thirty year and the 15 year FRMs both tumbled downward with the 30 year FRM averaging 4.51 percent with an average of 0.7 points, down from 4.60 percent reported the previous week. The 30 year FRM averaged 4.57 percent a year earlier.

The 15 year FRM decreased to 3.65 percent this week with an average 0.6 points, from 3.75 percent reported the previous week, and down from 4.06 percent a year ago.

Adjustable Rate Mortgages (ARM):

ARM interest rates also decreased in the last week as the 5-year Treasury-indexed hybrid ARM averaged 3.29 percent, with an average of 0.6 points, which is down from 3.30 percent the previous week. The 5 year ARM averaged 3.85 percent a year earlier.

The 1-year Treasury-indexed ARM averaged 2.95 percent this week with an average of 0.5 points, down from 3.01 percent the previous week. A year ago, the 1 year ARM averaged 3.74 percent.

Frank Nothaft, vice president and chief economist of Freddie Mac, stated, “Long-term bond yields and mortgage rates fell this week following a weak employment report. The economy added 18,000 jobs in June, well below the market consensus forecast, and the unemployment rate rose to 9.2 percent, the highest since December 2010. In addition, employee wages stagnated. These factors may lead to less consumer spending, which in turn, reduces the threat of inflation in the near term.”

30-Year Fixed Rate Mortgages US NE SE NC SW W
Average 4.51 4.53 4.54 4.55 4.54 4.43
Fees & Points 0.7 0.6 0.9 0.6 0.6 0.8

15-Year Fixed Rate Mortgages US NE SE NC SW W
Average 3.65 3.68 3.68 3.66 3.75 3.57
Fees & Points 0.6 0.6 0.8 0.5 0.5 0.7

5/1-Year Adjustable Rate Mortgages US NE SE NC SW W
Average 3.29 3.47 3.15 3.35 3.32 3.14
Fees & Points 0.6 0.5 0.8 0.4 0.5 0.7
Margin 2.74 2.74 2.75 2.72 2.76 2.73

1-Year Adjustable Rate Mortgages US NE SE NC SW W
Average 2.95 3.09 2.81 3.16 2.92 2.78
Fees & Points 0.5 0.6 0.5 0.4 0.8 0.5
Margin 2.76 2.78 2.75 2.73 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 4.57   4.06   3.85   3.74   4.60   3.75   3.30   3.01  
Fees & Points 0.7   0.7   0.7   0.7   0.7   0.7   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