Rate on 5-year ARM falls to record low

Interest rates continue to be the best single reason to be in the housing market. Whether you’re buying or need to sell, historically low financing is a huge benefit…

Rate on 5-year ARM falls to record low
But mortgage rates’ weekly move proves minimal: Freddie Mac
MarketWatch June 18, 2010
By Amy Hoak , Real Estate writer

Mortgage rates changed little this week, but the 5-year adjustable-rate mortgage managed to slide enough to break its record low, according to Freddie Mac’s weekly survey of conforming mortgage rates, released on Thursday.

Five-year Treasury-indexed hybrid ARMs averaged 3.89% for the week ended June 17, down from 3.92% last week and 4.97% a year ago. It’s the lowest the ARM has been since Freddie Mac started tracking it in January 2005.

One-year Treasury-indexed ARMs also fell, averaging 3.82%, down from 3.91% last week and 4.95% a year ago. It’s the lowest that the ARM has been since the week ended May 6, 2004, when it averaged 3.76%.

But fixed-rate mortgages inched up this week, with the 30-year fixed-rate mortgage averaging 4.75%, up from 4.72% last week; it averaged 5.38% a year ago. And the 15-year fixed-rate mortgage averaged 4.20%, up from 4.17% last week; it averaged 4.89% a year ago.

To obtain the rates, the fixed-rate mortgages and the 5-year ARM required payment of an average 0.7 point, while the 1-year ARM required an average 0.6 point. A point is 1% of the mortgage amount, charged as prepaid interest.

“Mortgage rates were little changed this week amid preliminary signs that the expiration of the home-buyer tax credit in April may have led to a slowdown in new construction,” said Frank Nothaft, Freddie Mac vice president and chief economist, in a news release.

“Starts on single-family homes fell 17% to an annualized pace of 468,000 units in May from April’s 20-month high. In addition, permits on one-unit homes fell to the slowest pace since May 2009,” he noted. Read story about housing starts.

“Finally, builders became more pessimistic in their near-term outlook in June, according to the National Association of Home Builders/Wells Fargo Housing,” he said. Read about builder pessimism.

But Nothaft added that household balance sheets have been improving over the last year: “In aggregate, households gained $6.3 trillion in net worth in the first quarter from a year ago, according to the Federal Reserve.

“In addition, homeowners have regained $1.1 trillion in home equity over the same time period,” he said

For more information regarding this post or other real estate information contact Robert Dixon at RE/MAX Palos Verdes Realty (310) 703-1848 or email info@robertdixon.net. Content of this or any other post is presumed to be accurate but not guaranteed.

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