Mortgage rates flattened this week as sinking oil prices reduced inflation fears, according to surveys conducted by Freddie Mac and Bankrate.com.

In Freddie Mac’s survey, the 30-year fixed-rate mortgage averaged 6.37 percent for the week ended today, up very slightly from last week’s average of 6.36 percent. The average for the 15-year fixed-rate mortgage is 5.9 percent, also up very slightly from last week when it averaged 5.89 percent. Points on both the 30- and 15-year averaged 0.6.

The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 5.86 percent this week, with an average 0.6 point, up from last week when it averaged 5.81 percent. The one-year Treasury-indexed ARM averaged 5.2 percent, with an average 0.6 point, up from last week when it averaged 5.12 percent.

“Recently released inflation indicators – the Consumer Price Index (CPI) and Producer Price Index (PPI) – brought down long-term bond yields, flattening out the yield curve,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Consequently, the difference between the 30-year fixed-rate mortgage and the one-year ARM rate is the narrowest it has been since November of 2001. This will make the one-year ARM product much less attractive to borrowers.

“Nevertheless, it’s good to keep in mind that current mortgage rates, overall, are still below the 1990s average of around 8 percent for a 30-year fixed-rate mortgage and 6 percent for the one-year ARM.”

In Bankrate.com’s survey, mortgage rates finally paused for a breath, following a nine-week run-up. The average 30-year fixed-rate mortgage remained at 6.42 percent, according to Bankrate.com’s weekly national survey of large lenders. The 30-year fixed rate mortgages in this week’s survey had an average of 0.35 discount and origination points.

Bankrate.com reported that the average 15-year fixed mortgage rate inched higher, but remains a shade under 6 percent at 5.99 percent. The average jumbo 30-year fixed-rate nudged higher from 6.6 percent to 6.61 percent. Adjustable-rate mortgages were mixed, with the average 5/1 adjustable-rate mortgage dipping from 5.94 percent to 5.93 percent, while the average one-year ARM increased from 5.44 percent to 5.5 percent.

Inflation concerns have pushed mortgage rates higher over the past two months, but those concerns eased somewhat this week, according to Bankrate.com. The release of both the Producer Price Index (PPI) and Consumer Price Index (CPI) calmed fears that inflation might be getting out of hand. With oil prices easing from $70 per barrel to below $60 per barrel, the PPI and CPI showed only moderate increases compared to last month’s jump higher. With bond investors no longer headed for the exits, yields on government and mortgage-backed bonds stabilized. Inflation scares off bond investors because it erodes the value of the fixed payments bondholders receive. News of moderate inflation was countered by stronger-than-expected retail sales, which underscores the Fed’s case for additional interest-rate hikes.

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

New York – 6.37 percent with 0.29 point

Los Angeles – 6.44 percent with 0.5 point

Chicago – 6.5 percent with 0.09 point

San Francisco – 6.52 percent with 0.24 point

Philadelphia – 6.31 percent with 0.33 point

Detroit – 6.41 percent with 0.27 point

Boston – 6.43 percent with 0.1 point

Houston – 6.44 percent with 0.52 point

Dallas – 6.45 percent with 0.47 point

Washington, D.C. – 6.31 percent with 0.66 point

***

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