A Drag On The Economy Even As Mortgage Rates Decline

Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®)  in which the 30-year fixed-rate mortgage (FRM) averaged 6.20 percent with an average 0.5 point for the week ending November 21, 2007, down from last week when it averaged 6.24 percent as well. Last year at this time, the 30-year FRM averaged 6.18 percent. The 30-year FRM has not been lower since the week ending May 10, 2007, when it averaged 6.15 percent.

The 15-year FRM this week averaged 5.83 percent with an average 0.5 point, down from last week when it averaged 5.88 percent. A year ago, the 15-year FRM averaged 5.91 percent. The 15-year FRM has not been lower since the week ending February 2, 2006, when it averaged 5.81 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.88 percent this week, with an average 0.5 point, down from last week when it averaged 5.96 percent. A year ago, the 5-year ARM averaged 5.99 percent. The 5-year ARM has not been lower since the week ending May 3, 2007 when it averaged 5.87 percent.

One-year Treasury-indexed ARMs averaged 5.42 percent this week with an average 0.6 point, down from last week when it was 5.50 percent. At this time last year, the 1-year ARM averaged 5.49 percent. The 1-year ARM has not been this low since the week ending March 22, 2007, when it averaged 5.40 percent.

“Both the producer price index and the consumer price index remained contained in October while industrial production fell,” said Frank Nothaft, Freddie Mac vice president and chief economist. “This allowed interest rates for the 30-year FRM to decline to the lowest levels since early May 2007 and the 15-year FRM to fall to a level not experienced since early last year.

“The housing market remains weak, continuing to be a drag on the economy. For instance, single-family housing starts fell 6.4 percent in October to 917,000 units (annualized), the slowest pace since September 1991, nearly 25 percent below that of October 2006. Additionally, homebuilder confidence in November remained at the lowest level on record.” 
 
 Source: FreddieMac, Primary Mortgage Market Survey® (PMMS®), www.freddiemac.com