Average 30-Year Mortgage Falls Below 5% To Near-Record Low -Freddie

By Amy Hoak

Rates on fixed-rate mortgages dropped to near record lows this week, with the 30-year fixed-rate mortgage making an encore appearance below 5%, according to Freddie Mac's (FRE) weekly survey of conforming mortgage rates, released on Thursday.

The 30-year fixed-rate mortgage averaged 4.98% for the week ending March 19, down from 5.03% last week. The mortgage averaged 5.87% a year ago. It hasn't been lower since the week ending Jan. 15, when it hit the record low of 4.96%.

Fifteen-year fixed-rate mortgages averaged 4.61% this week, down from 4.64% last week and 5.27% a year ago. The 15-year mortgage hasn't been lower since the week ending June 13, 2003, when it averaged 4.60%.

"Long-term mortgages followed bond yields lower for the second week as reports of slower industrial production suggested that business spending might ease this year," said Frank Nothaft, Freddie Mac chief economist, in a news release.

"Following the March 18 Federal Reserve monetary policy statement, which announced further spending initiatives on financial assets, long-term bond yields plummeted. Yields on 10-year Treasury bonds fell by about a half percentage point after the announcement, marking the largest one-day decline since Oct. 20, 1987."

Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 4.98%, down slightly from last week's 4.99%. The ARM averaged 5.56% a year ago.

But one-year Treasury-indexed ARMs averaged 4.91%, up from 4.80% last week, yet still lower than its 5.15% average a year ago.

To obtain the rates, all mortgages in the survey required payment of an average 0.7 point. A point is 1% of the mortgage amount, charged as prepaid interest.

The Mortgage Bankers Association on Wednesday said that the volume of mortgage applications filed was up a seasonally adjusted 21.2% last week, compared with the week before.

-By Amy Hoak, 415-439-6400; [e-mail]