Inflation Indications Ease Allowing Mortgage Rates To Drop Again

McLean, VA – According to Freddie Mac Primary Mortgage Market SurveySM (PMMSSM) the 30-year fixed-rate mortgage (FRM) averaged 6.63 percent, with an average 0.3 point, for the week ending August 2, 2006, down from last week's average of 6.72 percent. Last year at this time, the 30-year FRM averaged 5.82 percent.

The average for the 15-year FRM this week is 6.27 percent, with an average 0.3 point, down from last week's average of 6.34 percent. A year ago, the 15-year FRM averaged 5.38 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 6.27 percent this week, with an average 0.4 point, down from last week when it averaged 6.35 percent. A year ago, the five-year ARM averaged 5.30 percent.

One-year Treasury-indexed ARMs averaged 5.69 percent this week, with an average 0.7 point, down from last week when it averaged 5.78 percent. At this time last year, the one-year ARM averaged 4.47 percent.

(Average commitment rates should be reported along with average fees and points to reflect the total cost of obtaining the mortgage.)

"Second quarter Gross Domestic Product (GDP) came in weaker than the market had expected. This means inflation is less of a threat, and that translates into lower mortgage rates," said Frank Nothaft, Freddie Mac vice president and chief economist. "Although lower rates are a welcome sight, we still feel that the 30-year fixed-rate mortgage rate will drift up and down somewhat over the next few months, but will average less than seven percent for the year. "

Source: Freddie Mac