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 5.10 percent with an average 0.7 point for the week ending January 29, 2009, down from last week when it averaged 5.12 percent. Last year at this time, the 30-year FRM averaged 5.68 percent.

The 15-year FRM this week averaged 4.80 percent with an average 0.7 point, unchanged last week when it averaged 4.80 percent. A year ago at this time, the 15-year FRM averaged 5.17 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.27 percent this week, with an average 0.6 point, up from last week when it averaged 5.24 percent. A year ago, the 5-year ARM averaged 5.32 percent.

One-year Treasury-indexed ARMs averaged 4.90 percent this week with an average 0.6 point, down from last week when it averaged 4.92 percent. At this time last year, the 1-year ARM averaged 5.05 percent.

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

"Mortgage rates held steady this week," said Frank Nothaft, Freddie Mac vice president and chief economist. "The index of leading indicators rose 0.3 percent in December, the first increase in 6 months, fueled by an expansion in the money supply. However, the Federal Reserve acknowledged in its January 28th policy committee statement that since December the economy has weakened further.

"Both the S&P/Case-Shiller® 20-city composite index, which registered an 18 percent annual decline through November, and the National Association of Realtors® (NAR) sales data, down 15 percent in December from a year ago, indicate sharply lower house prices across many U.S. metropolitan areas. At the same time, interest rates for 30-year fixed-rate mortgages reached a 50-year low toward the end of December. These two factors contributed to housing affordability reaching its highest level since 1973, as measured by the NAR's monthly affordability index and help to explain the 7.0 percent increase in existing home sales in December."

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.frediemac.com

With foreclosures spiking and banks still moving slowly to list repossessed homes in the market, the housing inventory is even bigger than current statistics show. There are a substantial number of foreclosed homes not being listed; this helps in not further lowering the already steeply depressed prices when the inventory goes on the market.

With this, the Federal Reserve is taking measures to help distressed borrower keep homes. The Fed program covers a number of options to provide relief which includes the following: 1) lessen the amount the borrower owes on the mortgage; 2) reduce the interest rate; 3) or prolong the term of the loan.

It is still not clear how many borrowers would benefit. However, a borrower must be at least 60 days delinquent in their mortgage to qualify for help. This is in connection with the setting up of the $700 billion bailout fund which was signed into law last year. The Fed is in charge to take foreclosure relief actions to help arrest foreclosures.

In the letter of Fed Chairman Ben Bernanke sent Tuesday to Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, he mentioned that "The goal of the policy is to avoid preventable foreclosures on residential mortgage assets that are held, owned or controlled by a Federal Reserve Bank."

In a RealtyTrac, a California-based foreclosure listing firm, report, homeowners who faced foreclosure proceedings last year increased 81 percent to 2.3 million compared to 2007 figures. Of this, more than 860,000 properties were repossessed by lenders last year, more than doubling 2007 level. Nevada, Florida, Arizona and California had the highest foreclosure rates last year.

This is the worst housing, credit and financial disaster since the 1930s which have brought the nation into a recession. So far, government programs have yet to show that their actions are able to solve or help curb the problems the nation is facing and provide relief to trouble borrowers.

The Mortgage Bankers Association mortgages seasonally adjusted index fell 38.8% to 732.1 in the week ended January 23. The fixed 30-year mortgage rates averaged 5.22 in the week, down from 5.24 percent and 4.89 percent in early January.

The MBA's seasonally adjusted index of refinancing applications dropped 48 percent to 3,373.9 last week while loan requests for home purchases declined 2.9% to 294.3.

Analysts observed that the mortgage rates increase is due to increased government borrowing to pay for financial bailouts and expected economic stimulus facilitate recovery recession have caused Treasury yields increase, countering Fed efforts to drive mortgage rates down.

The 10-year Treasury yields, which help control mortgage rates, have increased nearly a half-percentage point since late December to 2.53%.

A home price index report showed record annual pace drops in November. The S&P Case-Shiller Home Price Index, a survey of 20 major metropolitan areas across the nation, tumbled by the sharpest annual rate on record, 18.2 percent over the 12 months ended Nov. 30. A annual rate drop not observed since 2004.

The 10-city index fell 19.1 percent same as October for the biggest drop in the index 21-year history.

Homes in the 20-city index have lost more that a quarter of their value since their peak in July 2006. Phoenix, Las Vegas and San Francisco led the losers with annual declines greater than 30 percent. Phoenix recorded the worst at 32.9%, followed by Las Vegas, at 31.6%.

Eleven of the 20 cities showed record fall, and the annual price drops for 14 of the cities were at double-digit percentage.

The National Association of Realtors said  in a report last Monday, the median home price dropped a record 15 percent in December to $175,400, down from $207,000 a year ago. That caused a surprising increase in sales compared to November. With the falling prices, more renters are now seen buying a home for the first time in years. Falling home together with lower interest rates makes owning a house more affordable and is luring buyers back into the market.

With the NAR’s home affordability index, November showed the best reading since 1993.

With a 10 percent down payment and the current interest rates, a buyer of a median-priced home now would save about $254 a month if he bought today instead of last year.

The number of existing homes sold in December unexpectedly increased 6.5% from the previous month where bargain hunters where seen as seizing the opportunity of record low home prices according to a report released Monday. Lower home prices were caused by the high volume of distressed sales, which covers 45% of December sales according to the report.

The National Association of Realtors said that home sales rose to a seasonally-adjusted annual rate of 4.74 million in December from a downwardly revised pace of 4.45 million sold in November.

Analysts, however, warned that prices have not reached its bottom and are likely to fall further through 2009, and said the outlook for home sales is still highly unpredictable despite low mortgage rates and government relief efforts.

The nationwide median sales price dropped to $175,400, down 15.3 percent from $207,000 a year ago. Bargain prices are enticing buyers back into the market.  That was the lowest price since May 2003 and the biggest year-over-year decline on records since 1968. In 2008, there were 4,912,000 homes sold, the lowest volume since 1997 when there were 4,371,000 homes sold.

Sales volume in 2008 was down 13.1% from the 5,652,000 existing homes sold a year ago. With the sales increase, the number of homes available on the market decreased 11.7% in December from the previous month, to 3.68 million which is about 9.3-month inventory supply at the current pace of sales. That was down from an 11.2-month supply in November.

"The higher monthly sales gain and falling inventory are steps in the right direction, but the market is still far from normal, balanced conditions," said NAR chief economist Lawrence Yun in a written statement.

In the West, the existing home sales increased 13.6 percent to an annual rate of 1.25 million in December up 31.6 percent compared to December 2007. The median price in the West was down 31.5 percent to from December 2007 figure of $213,000.

In the South, number of homes sold surged 7.4 percent to an annual pace of 1.74 million in December, but that was still 11.2% lower than December 2007 figures.

In the Midwest increased, there was a 4 percent in December to an annual rate of 1.04 million, but dropped 10.3 percent from the same period last year.

The Northeast saw sales dropped 1.4 percent to an annual pace of 720,000 in December, down 14.3 percent a year ago.