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 5.03 percent with an average 0.7 point for the week ending October 29, 2009, up from last week when it averaged 5.00 percent. Last year at this time, the 30-year FRM averaged 6.46 percent.

The 15-year FRM this week averaged 4.46 percent with an average 0.6 point, up from last week when it averaged 4.43 percent. A year ago at this time, the 15-year FRM averaged 6.19 percent.

The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.42 percent this week, with an average 0.6 point, up from last week when it averaged 4.40 percent. A year ago, the 5-year ARM averaged 6.36 percent.

The one-year Treasury-indexed ARM averaged 4.57 percent this week with an average 0.6 point, up from last week when it averaged 4.54 percent. At this time last year, the 1-year ARM averaged 5.38 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 mortgages have averaged just below 5 percent this year, which is the lowest 10-month average since the survey began in 1971," said Frank Nothaft, Freddie Mac vice president and chief economist. "As a result, refinance activity has accounted for almost seven out of 10 mortgage applications on average this year," according to Freddie Mac's survey.

"Economic data releases this week offered mixed signals as to the current state of the housing market. For example, total existing home sales jumped 9.4 percent to an annualized rate of 5.57 million homes in September, the strongest pace since July 2007, according to the National Association of Realtors®. However, new home sales unexpectedly fell 3.6 percent to 402,000 houses, the weakest since June of this year, based on figures from the Department of Commerce. Nonetheless, stronger housing demand has lowered the inventory of unsold existing homes in September to the lowest since January of this year and for new homes the lowest since November 1982, which should help stabilize falling house prices."

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

Senators agreed Wednesday to extend a popular tax credit for first-time homebuyers and expand the program offering a reduced credit to some repeat buyers.

The $8,000 tax credit for first-time homebuyers which was set to expire at the end of November is to be extended till the end of April. Senators agreed to extend it till the end of April 2010.

The coverage was also expanded to give $6,500 tax credit to repeat buyers.

The tax credits would is geared to help homebuyers who sign sales agreements by the end of April.

They would have until the end of June to close on their new homes.

Senators were still discussing the expansion of a separate tax credit that lets money-losing businesses get refunds for taxes paid in previous years, providing them with an immediate source of cash.

Sales of new homes fell unexpectedly last month after rising for five straight months as the effects of a temporary tax credit for first-time owners started to fade.

The Commerce Department said Wednesday that sales fell 3.6 percent to a seasonally adjusted annual rate of 402,000 last month from a downwardly revised rate of 417,000 in August. It was the first time since March.

Despite the decline, the market is still 22 percent above the January figure when sales reached the bottom, though 70 percent below its peak recorded in July 2005.

The median sales price of $204,800 in September 9.1 percent below last year’s $225,200, but 2.5 percent August's $195,200. The average sales price rose to $282,600.

Analysts attribute the decline to the potential expiration of the new home-buyer tax credit. The tax break worth up to $8,000 for eligible first time home buyers is set to expire at the end of November but Congress is expected to extend and expand the program, but the terms are still being debated.

The seasonally adjusted estimate of new homes for sales at the end of September was 251,000 units which represent 7.5 months at current sales rate. This is 4 percent below August and the lowest inventory in 27 years.

U.S. home prices improved for the fourth straight month in August while year over year decline moderates, indicating that the housing markets may be on its way to recovery, a report issued Tuesday.

The prices for the Standard & Poor's/Case-Shiller home price index of 20 major cities rose 1.2 percent in August to a seasonally adjusted reading of 144.5 following a 1.6 percent increase in July.

Home prices were still down 11.3% versus August 2008 but the rate of declines have slowed down since February.

While home prices are still about 30 percent below from the peak in 2006, the rebound appears widespread. Home prices have improved month-over-month in 15 of 20 metropolitan areas in August with San Francisco, Minneapolis and San Diego leading the pack.

Prices in Las Vegas, Seattle and Charlotte, N.C., dropped to their lowest levels in August.

Prices in Las Vegas are 56 percent below its peak in April 2006.

Home prices rose 2.8% in San Francisco during August, while San Diego prices were up 2.5% and Los Angeles gained 1.8% in the month.

Minneapolis had the biggest increase, with home prices rising 3.2% from July to August.

But prices continued to slide in areas that have been hit hard by foreclosures. Prices dropped 0.5% in Cleveland and 0.3% in Las Vegas during August.

 

A proposal by top Democrats in the Senate regarding the tax credit for first-time homebuyers could come to a vote before expiring on November 30. In the proposal, the tax credit would be gradually phased out over the course of next year.

The proposal, by Majority Leader Harry Reid, D-Nev., and Senate Finance Committee Chairman Max Baucus, D-Mont., would extend the $8,000 tax credit through March 31.

The plan, which could face a vote in the Senate this week, appears to pre-empt a far more costly $17 billion bipartisan plan that would extend the $8,000 credit through June 30, 2010, boost the income cap for eligibility and open the credit to all buyers, rather than just first-timers.

Senators are planning to add the homebuyer tax credit extension to legislation to extend unemployment benefits by up to 20 weeks. That bill faces a key test vote on Tuesday.

The plan is especially popular with homebuilders who raked in huge amount of profits during the boom years but are struggling today. Critics of the proposal say it’s a steal as some of the very companies that helped build up the housing bubble years ago will benefit from this.