Mortgage Rates Drop Sharply on European Debt Worries

November 3, 2011 (Shirley Allen)

Uncertainty over the European debt crisis benefitted those who were seeking to secure a mortgage or refinance this week as mortgage rates dropped sharply in reaction to the turmoil according to Freddie Mac’s Primary Mortgage Market Survey® (PMMS) for the week ending November 2nd.

Fixed Rate Mortgages:

Fixed rate mortgage interest rates fell to their lowest levels since hitting their record low on October 6th with the 30-year fixed rate mortgage averaging 4.00 percent with an average of 0.7 points, down from last week’s average of 4.10 percent. A year ago the 30-year fixed rate mortgage averaged 4.24 percent.

The 15-year fixed rate mortgage averaged 3.31 percent this week with an average 0.7 points, down from 3.38 percent the previous week, and down from 3.63 percent a year ago.

Adjustable Rate Mortgages:

Adjustable rate mortgage interest rates were also affected by the debt turmoil with the 5-year Treasury-indexed hybrid ARM averaging 2.96 percent, down from 3.08 percent last week, with an average of 0.6 points. The 5-year adjustable rate mortgage averaged 3.39 percent a year earlier.

The 1-year Treasury-indexed adjustable rate mortgage also decreased this week, averaging 2.88 percent with an average of 0.6 points, down from 2.90 percent the previous week. A year ago, the 1 year adjustable rate mortgage averaged 3.26 percent.

Frank Nothaft, vice president and chief economist of Freddie Mac, stated, “Market concerns over the European debt market drew investors to U.S. Treasury securities, lowering bond yields and mortgage rates. Meanwhile, on the home front, the U.S. economy continued its gradual recovery. The Bureau of Economic Analysis reported the economy grew 2.5 percent in the third quarter, the strongest pace in a year, led by a surge in consumer expenditures. In addition, consumer spending rose 0.6 percent in September, nearly threefold that of August. Finally, consumer sentiment, as measured by the Thomson Reuters/University of Michigan index, rose for the second month in a row in October to its highest reading since July.”

30-Year Fixed Rate Mortgages US NE SE NC SW W
Average 4.00 4.01 4.06 4.02 4.03 3.94
Fees & Points 0.7 0.7 0.8 0.6 0.7 0.8

15-Year Fixed Rate Mortgages US NE SE NC SW W
Average 3.31 3.33 3.32 3.32 3.35 3.27
Fees & Points 0.7 0.7 0.9 0.5 0.8 0.8

5/1-Year Adjustable Rate Mortgages US NE SE NC SW W
Average 2.96 3.08 2.92 3.09 2.88 2.82
Fees & Points 0.6 0.6 0.7 0.4 0.7 0.6
Margin 2.74 2.75 2.75 2.73 2.76 2.73

1-Year Adjustable Rate Mortgages US NE SE NC SW W
Average 2.88 3.00 2.78 3.20 2.68 2.70
Fees & Points 0.6 0.8 0.6 0.4 0.6 0.5
Margin 2.76 2.79 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 4.24   3.63   3.39   3.26   4.10   3.38   3.08   2.90  
Fees & Points 0.8   0.7   0.6   0.7   0.8   0.7   0.5   0.6  
Margin N/A N/A 2.75   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