September 20, 2008

30 Fixed Mortgage Rates Fall For Fifth Straight Week

Freddie Mac updates for the week of Sept 18 2008

30-year fixed-rate mortgage: Averaged 5.78 percent with an average 0.6 point for the week ending September 18, 2008, down from last week when it averaged 5.93 percent. Last year at this time, the 30-year FRM averaged 6.34 percent. The last time the 30-year FRM was lower was the week ending February 14, 2008, when it averaged 5.72 percent.

15-year fixed-rate mortgage: Averaged 5.35 percent with an average 0.6 point, down from last week when it averaged 5.54 percent. A year ago at this time, the 15-year FRM averaged 5.98 percent. The last time the 15-year FRM was lower was the week ending March 27, 2008, when it averaged 5.34 percent.

Five-year Treasury-indexed ARMs: Averaged 5.67 percent this week, with an average 0.7 point, down from last week when it averaged 5.87 percent. A year ago, the 5-year ARM averaged 6.21 percent.

One-year Treasury-indexed ARMs: Averaged 5.03 percent this week with an average 0.5 point, down from last week when it averaged 5.21 percent. At this time last year, the 1-year ARM averaged 5.65 percent.


Rates dropped almost 3/4 of a basis point. I'm not sure that will help home sales significantly, but its good news. As long as these bad loans accumulate and banks are forced to off load inventory, we will continue to see falling prices. Outside of some bargain hunting producing sales we are still building supply. Its anyones guess as to how the Govt plan will affect supply, but if it keeps people in their homes then thats a good thing.

The banking industry and the mortgage industry clearly do not want to significantly re negotiate mortgages that no longer reflect the value of the home. perhaps the plan will buy these bad debts at such a discount it can afford to do so and still see positive cash flow.

If the US buys wisely, we can see people stay in their homes reducing housing supply over time. Banks with bad debt off their balance sheets will be more comfortable making loans and perhaps a small profit for the US, since it has the where-with-all to wait out the crises. Remember, the US did bail out Chrysler years ago and in the end it profited.

Thanks for Reading
Howard Bell
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