Mortgage Rates Follow Bond Yields Higher -Freddie Mac

By Amy Hoak

Interest rates on both fixed-rate and adjustable-rate mortgages rose this week, according to Freddie Mac's (FRE) weekly rate survey released on Thursday.

"Mortgage rates followed bond yields higher this week following reports of record continuing jobless claims and a downward revision in economic growth in the fourth quarter of 2008," said Frank Nothaft, Freddie Mac chief economist, in a news release. "Real gross domestic product was revised from a 3.8% decline to a 6.2% drop in the fourth quarter mostly led by a 4.3% fall in consumer spending, which was the largest decrease since the second quarter of 1980."

The 30-year fixed-rate mortgage averaged 5.15% for the week ending March 5, up from 5.07% last week, but still down from 6.03% a year ago. Fifteen-year fixed-rate mortgages averaged 4.72%, up from 4.68% last week, but still down from 5.47% a year ago.

Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 5.08%, up from 5.06% last week; the ARMs averaged 5.34% a year ago. And one-year Treasury-indexed ARMs averaged 4.86%, up from 4.81% last week; the ARMs averaged 4.94% a year ago.

To obtain the rates, the fixed-rate mortgages required payment of an average 0.7 point, while the five-year ARM required an average 0.6 point and the one-year ARM required an average 0.5 point. A point is 1% of the mortgage amount, charged as prepaid interest.

The rates rose as the housing market showed continued signs of slowing, Nothaft said.

"New home sales fell 10.2% in January to the slowest pace since records began in January 1963 while pending existing home sales slowed by 7.7%, the weakest since the series began in January 2001. More recently the Federal Reserve noted in its March 4 regional economic report that residential real estate markets remained in the doldrums in most areas, with only scattered, very tentative signs of stabilization."

Mortgage application volume was down a seasonally adjusted 12.6% last week, compared with the week before, the Mortgage Bankers Association reported on Wednesday.

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