Modest Inflation Expectations Allow Mortgage Rates to Once Again Set New Record Lows

McLean, VA – Freddie Mac (OTC: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), and for yet another week, fixed-rate mortgages reached record lows, as did the 5-year adjustable rate in this survey. (The 30-year fixed-rate survey began in 1971, the 15-year began in 1991, and the 5-year adjustable in 2005.)

News Facts

• 30-year fixed-rate mortgage (FRM) averaged 4.32 percent with an average 0.7 point for the week ending September 2, 2010, down from last week when it averaged 4.36 percent. Last year at this time, the 30-year FRM averaged 5.08 percent.

• 15-year FRM this week averaged a record low of 3.83 percent with an average 0.6 point, down from last week when it averaged 3.86 percent. A year ago at this time, the 15-year FRM averaged 4.54 percent.

• 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.54 percent this week, with an average 0.6 point, down from last week when it averaged 3.56 percent. A year ago, the 5-year ARM averaged 4.59 percent.

• 1-year Treasury-indexed ARM averaged 3.50 percent this week with an average 0.7 point, down from last week when it averaged 3.52 percent. At this time last year, the 1-year ARM averaged 4.62 percent.

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

Quotes

Attributed to Amy Crews Cutts, deputy chief economist, Freddie Mac.

• "The 12-month price growth of core personal expenditures remained at 1.4 percent in July, which kept overall inflation expectations well at bay. Fed chairman Bernanke reiterated this in his August 27th speech in Wyoming, noting that with inflation expectations reasonably stable and the economy growing, inflation should remain near current readings for some time before rising slowly. As a result, mortgage rates eased further this week to new historic lows.

• "House prices, however, appear to be firming. Home prices rose 2.3 percent between the first and second quarter of this year, reaching the highest level since the fourth quarter of 2008, according to the S&P/Case Shiller® National Home Price Index. In addition, 15 metropolitan areas in the 20-City Composite Index experienced annual house price growth in June, compared to 13 in May and 11 in April."

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than five million renters.

Fixed-Rate Mortgages

Five/One-Year Adjustable-Rate Mortgages

One-Year Adjustable-Rate Mortgages

Freddie Mac defines its regions as follows:

Northeast: NY, NJ, PA, DE, MD, DC, VA, WV, ME, NH, VT, MA, RI, CT
Southeast: NC, SC, TN, KY, GA, AL, FL, MS, PR, VI
North Central: OH, IN, IL, MI, WI, MN, IA, ND, SD
Southwest: TX, LA, NM, OK, AR, MO, KS, CO, NE, WY
West: CA, AZ, NV, OR, WA, UT, ID, MT, HI, AK, GU

Freddie Mac's Primary Mortgage Market Survey (PMMS) is for informational purposes only and Freddie Mac is not responsible for business decisions made based on the reported results of the PMMS. In general, the data presented were calculated from information collected Monday through Wednesday of the same week that the PMMS is released and may not reflect mortgage rates, fees or points currently available from any lender. Freddie Mac may change the methodology used to conduct the PMMS at any time and without notice.

Definitions

Commitment Rate is the interest rate a lender would charge to lend mortgage money to a qualified borrower exclusive of the fees and points required by the lender. This commitment rate applies only to conventional financing on conforming mortgages with loan-to-value rates of 80 percent or less.

ARM Index is the One-year Treasury

Loan to Value Ratio (LTV) is the ratio of the loan amount of a mortgage loan to the lower of the appraisal value or purchase price of the property securing the loan.

Origination Fees and Discount Points are the total charged by the lender at settlement. One point equals one percent of the loan amount.

Margin is a fixed amount added to the underlying index to establish the fully indexed rate for an ARM.

Weighted Averages for the Primary Mortgage Market Survey have been adjusted as of December 17, 2009. The new weights use the dollar volume of conventional first-lien mortgage originations within the 1-unit Freddie Mac loan limit as reported under the Home Mortgage Disclosure Act (HMDA) for 2008. The weights are listed in the table below.

30-Year Fixed Rate Mortgages

15-Year Fixed Rate Mortgages

5/1-Year Ajustable Rate Mortgages

1-Year Ajustable Rate Mortgages

The National Mortgage Rate Snapshot