Shorter-Term Rates Are Mixed

McLean, VA – Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 5.14 percent with an average 0.8 point for the week ending December 24, 2008, down from last week when it averaged 5.19 percent. Last year at this time, the 30-year FRM averaged 6.17 percent. The 30-year FRM has not been lower since Freddie Mac started the Primary Mortgage Market Survey in 1971.

The 15-year FRM this week averaged 4.91 percent with an average 0.7 point, down from last week when it averaged 4.92 percent. A year ago at this time, the 15-year FRM averaged 5.79 percent. The 15-year FRM has not been lower since April 1, 2004, when it averaged 4.84 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.49 percent this week, with an average 0.6 point, down from last week when it averaged 5.60 percent. A year ago, the 5-year ARM averaged 5.90 percent.

One-year Treasury-indexed ARMs averaged 4.95 percent this week with an average 0.6 point, up slightly from last week when it averaged 4.94 percent. At this time last year, the 1-year ARM averaged 5.53 percent.

(Average commitment rates should be reported along with average fees and points to reflect the total cost of obtaining the mortgage.)

"Interest rates on 30-year fixed-rate mortgages eased for the eighth straight week and set another record low since Freddie Mac's survey began in 1971," said Frank Nothaft, Freddie Mac vice president and chief economist. "Real GDP growth fell 0.5 percent in the third quarter of the year, pulled down by the largest drop in consumer spending since the second quarter of 1980. The market consensus calls for an even larger decline in the last three months of the year.

"The housing market, meanwhile, continues to contract. Existing home sales (excluding condominiums and co-ops) fell 8.6 percent in November to 4.0 million houses (annualized) in November, representing the slowest pace since July 1997. Moreover, the median sales price fell 12.8 percent from November 2007, the largest 12-month decline since records began in January 1968, according to the National Association of Realtors®.”

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than five million renters.

 Source: FreddieMac, Primary Mortgage Market Survey, www.freddiemac.com

The number of existing homes sold plunged 8.6% in November as prices registered record drops according to a housing industry report issued Tuesday.

The National Association of Realtors reported that home sales dropped to an annualized rate 4.49 million units last November. That was way below October’s figure of 4.98 in October and very much smaller than the 4.93 million units as earlier estimated by a consensus of industry analysts as reported by Briefing.com.

"The only region where we're seeing more sales are where bargain hunters are taking advantage of distressed sale prices," said Lawrence Yun, the Realtors' chief economist. "About 45% of transactions, nationally, were of distressed properties."

Yun specified the financial market turmoil as the reason for devastating report. For months, sales had lingered 4.9 million to 5.1 million.

"Today's figure reflects the stock market crash that began in October," he said.

Sales plunged even though there was a big drop prices and as property values continued to wane. The median price for existing home sold in November was $181,300. This was down 13.2% compared to last year same month’s median which was $208,800.

This was the largest price drop ever recorded by NAR since the Great Depression according to Yun.

Meanwhile, the inventories keep on ballooning to 4.2 million in November. This is about 11.2 months of supply, at the current rate of sales, up from 10.2 months in October.

In a joint report of the US Census Bureau and the Department of Housing and Urban Development, sales of new homes fared a little better in November with 407,000 units sold. That was down 2.9% from 419,000 sold in October and 3.1% below Briefing.com's projection of 420,000.

New home sales have plunged 35.3% from last November, when an estimated 629,000 units were sold.

For new homes sold, the median sale price in November was $220,400 where there was an increase of 0.9% from $218,400 in October.

Loans modifications seem is not the answer to the problem of mortgage borrowers defaulting. The rate of borrowers defaulting after their loans are modified is increasing without any indication of slowing down.

Re-default rates and delinquencies continue to increase, U.S. banking regulators said on Monday. The figures showed that six months after loan modifications, about 37 percent of mortgage loans modified in the first quarter were 60 or more days delinquent. With three months after modification, about 19 percent were 60 or more days delinquent or in the process of foreclosure.

"One very troubling point is that, whether measured using 30-day or 60-day delinquencies, re-default rates increased each month and showed no signs of leveling off after six months or even eight months," John Dugan, head of the Office of the Comptroller of the Currency, said in a statement.

The number of delinquencies increased across all loan categories. The subprime loans had the highest default rates. At the same time, nine in every 10 mortgages remain current, the joint report by OCC and the Office of Thrift Supervision said.

The head of the Federal Deposit Insurance Corp and some U.S. lawmakers have called for a more aggressive effort by lenders to modify mortgage terms to help keep people in their homes.

McLean, VA – Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®), in which the 30-year fixed-rate mortgage (FRM) averaged 5.19 percent with an average 0.7 point for the week ending December 18, 2008, down from last week when it averaged 5.47 percent. Last year at this time, the 30-year FRM averaged 6.14 percent. The 30-year FRM has not been lower since Freddie Mac started the Primary Mortgage Market Survey in 1971.

The 15-year FRM this week averaged 4.92 percent with an average 0.7 point, down from last week when it averaged 5.20 percent. A year ago at this time, the 15-year FRM averaged 5.79 percent. The 15-year FRM has not been lower since April 1, 2004, when it averaged 4.84 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.60 percent this week, with an average 0.6 point, down from last week when it averaged 5.82 percent. A year ago, the 5-year ARM averaged 5.90 percent.

One-year Treasury-indexed ARMs averaged 4.94 percent this week with an average 0.5 point, down from last week when it averaged 5.09 percent. At this time last year, the 1-year ARM averaged 5.51 percent.

(Average commitment rates should be reported along with average fees and points to reflect the total cost of obtaining the mortgage.)

"Interest rates for 30-year fixed-rate mortgage rates fell for the seventh consecutive week, moving these rates to the lowest since the survey began in April 1971," said Frank Nothaft, Freddie Mac vice president and chief economist. "The decline was supported by the Federal Reserve announcement on December 16th, when it cut the federal funds target to a record low and stated it stood ready to expand its purchases of mortgage-related assets as conditions warrant."

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than five million renters.

Source: FreddieMac, Primary Mortgage Market Survey® (PMMS®), www.freddiemac.com