Long-term mortgage rates dropped for the second consecutive week, according to surveys conducted by Freddie Mac and Bankrate.com.

In Freddie Mac’s survey, the 30-year fixed-rate mortgage averaged 5.77 percent for the week ended today, down a little from last week when it averaged 5.8 percent. The average for the 15-year fixed-rate mortgage this week is 5.35 percent, down from last week when it averaged 5.4 percent. Points on the 30-year averaged 0.5, while points on the 15-year averaged 0.6.

The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 5.3 percent this week, with an average 0.6 point, down from last week when it averaged 5.34 percent. The one-year Treasury-indexed ARM averaged 4.56 percent this week, with an average 0.7 point, down slightly from last week when it averaged 4.58 percent.

“New-home sales hit a record in July while existing-home sales were at the third-highest level they have ever been,” said Frank Nothaft, vice president and chief economist at Freddie Mac. “There is no doubt that low mortgage rates have been the driver of this phenomenal housing market.

“Although mortgage rates slipped a little again this week, I do see rates trending upward over the year. As rates rise, housing sales will undoubtedly start to slow, but that slowdown will come from record levels. I think it safe to say that the housing industry will remain a formidable force in the national economy for the foreseeable future.”

In Bankrate.com’s survey, fixed mortgage rates declined for the second consecutive week. The average 30-year fixed-rate mortgage decreased from 5.88 percent to 5.86 percent, according to Bankrate.com. The 30-year fixed rate mortgages in this week’s survey had an average of 0.35 discount and origination points.

The average 15-year fixed mortgage rate declined slightly from 5.5 percent to 5.47 percent, while the average jumbo 30-year fixed-rate mortgage slipped from 6.07 percent to 6.04 percent. The average 5/1 adjustable-rate mortgage decreased from 5.56 percent to 5.47 percent, and the one-year ARM dropped slightly to 4.92 percent from 4.94 percent one week ago.

Mortgage rates had risen six weeks in a row, from the beginning of July into mid-August. Now they have gone down for two weeks, Bankrate.com reported. Here are the differences between then and now: On June 30, the Federal Reserve raised short-term interest rates, and long-term rates responded (finally, the Fed would say) with a sustained rise. The economy seemed strong; investors expected a rise in inflation in the long term, and long-term interest rates rose in response.

Then petroleum prices went up sharply, Bankrate.com reported. Consumers responded as investors feared they would, by holding more tightly to their wallets – except when they were refueling their cars or buying houses. Last week the federal government posted a disappointing report on retail sales in July, and this week the government said that orders for big-ticket, durable goods fell 4.9 percent in July, which was a much bigger drop than expected.

Investors responded to that weakness by fleeing for the safety of treasury bonds, which bid up their prices and pushed down their yields. Rates for mortgages, which are closely tied to treasury yields, also fell.

The following is a sampling of Bankrate’s average 30-year-mortgage interest rates this week in some U.S. metropolitan areas.

New York – 5.86 percent with 0.19 point

Los Angeles – 5.89 percent with 0.48 point

Chicago – 5.96 percent with 0.02 point

San Francisco – 5.92 percent with 0.33 point

Philadelphia – 5.8 percent with 0.34 point

Detroit – 5.84 percent with 0.25 point

Boston – 5.94 percent with 0.11 point

Houston – 5.8 percent with 0.75 point

Dallas – 5.85 percent with 0.57 point

Washington, D.C. – 5.74 percent with 0.54 point


What’s your opinion? Send your Letter to the Editor to opinion@inman.com.

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