By Amy Hoak
Interest rates on fixed-rate mortgages dropped this week,
according to Freddie Mac's weekly survey of conforming mortgages,
released Thursday.
The benchmark 30-year fixed-rate mortgage averaged 5.16% for the
week ending Feb. 12, down from 5.25% last week and 5.72% a year
ago.
The 15-year fixed-rate mortgage also fell, averaging 4.81%, down
from 4.92% last week and 5.25% a year ago.
"Interest rates for 30-year fixed-rate mortgages are almost 1.5
percentage points below 2008's peak set on July 24, 2008, offering
many homeowners an incentive to refinance," Frank Nothaft, Freddie
Mac vice president and chief economist, said in a news release.
"This would translate into a monthly payment savings of around $188
on a $200,000 mortgage."
Rates on adjustable-rate mortgages were more stable. Five-year
Treasury-indexed hybrid ARMs averaged 5.23%, down from last week's
5.26% average; they averaged 5.19% a year ago.
One-year Treasury-indexed ARMs averaged 4.94%, up from last
week's 4.92%. They averaged 5.00% a year ago.
To obtain the rates, the fixed-rate mortgages required an
average payment of 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 low rates are prompting many homeowners to refinance their
mortgages.
"The Bureau of Economic Analysis estimated that the weighted
average mortgage rate of loans outstanding was about 6.2% in the
fourth quarter of 2008," Nothaft said. "As a result, the share of
refinancing among the total number of conventional mortgage
applications has exceeded 50% for the past 11 weeks and averaged
80% over this period, according to the Mortgage Bankers
Association."
Last week, however, refinance application volume fell by 30.3%
from the previous week, according to the MBA's weekly survey.
-Amy Hoak; 415-439-6400; AskNewswires@dowjones.com