Mortgage rates plunge this week

Interest rates for 30-year fixed-rate mortgages dipped below 6 percent for the week ending Sept. 11, as investors who buy securities that fund loans reacted to a government bailout plan that includes explicit backing of the debt of mortgage financiers Fannie Mae and Freddie Mac.

Borrowers seeking 30-year fixed-rate mortgages paid an average of 5.93 percent and 0.7 point for the week, down from 6.35 percent a week ago and 6.31 percent a year ago, Freddie Mac said in its weekly Primary Mortgage Market Survey.

The 15-year fixed-rate mortgage averaged 5.54 percent with an average 0.7 point, down from 5.9 percent a week ago and 5.97 percent a year ago.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.87 percent with an average 0.7 point, down from 5.97 percent a week ago and 6.17 percent a year ago.

One-year Treasury-indexed ARMs averaged 5.21 percent with an average 0.6 point, up from 5.15 percent last week but down from 5.66 percent a year ago.

The Mortgage Bankers Association reported that refinance applications are up 18 percent over the past three weeks through Sept. 5, indicating that refinance activity has already begun to pick up, said Frank Nothaft, Freddie Mac vice president and chief economist.

In a statement, Nothaft said it's an "opportune time" for rates to fall, noting that the National Association of Realtors recently reported its index of pending home sales fell 3.2 percent from June to July (see Inman News story).

The long-term impacts on interest rates resulting from the government's move to provide capital to Fannie and Freddie probably won't be clear for 30 to 45 days, John Courson, chief operating officer of the Mortgage Bankers Association, told Inman News Monday (see story).

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