Rates on 30-year fixed-rate mortgages averaged 4.97 percent with an average of 0.7 point this week, down from 5.01 percent a week ago, Freddie Mac said in releasing the results of its weekly Primary Mortgage Market Survey.

Rates surveyed by Freddie Mac are for prime borrowers taking out loans with 20 percent downpayments. Borrowers taking out loans too large or risky for purchase or guarantee by Freddie Mac can expect to pay more.

Freddie Mac said the 15-year fixed-rate mortgage averaged 4.34 percent with an average 0.6 point for the week ending Feb. 11, down from 4.4 percent last week and 4.81 percent a year ago.

The 5-year treasury-indexed hybrid adjustable-rate mortgage (ARM) loan averaged 4.19 percent this week, with an average 0.6 point, down from 4.27 percent last week and 5.23 percent a year ago.

The 1-year Treasury-indexed ARM averaged 4.33 percent this week with an average 0.6 point, up from 4.22 percent last week but down from 4.94 percent a year ago.

In December, the 30-year fixed-rate hit a record low of 4.71 percent in records dating back to 1971. Mortgage rates are expected to rise if the Federal Reserve wraps up ongoing purchases of $1.25 trillion in mortgage-backed securities (MBS) at the end of March, as planned.

If conditions warrant, the Fed may even start selling off its MBS holdings off as part of monetary tightening measures to head off inflation (see story).

In a Jan. 12 forecast, the Mortgage Bankers Association projected rates on 30-year fixed-rate mortgages will rise to 6.1 percent during the final quarter of 2010, 6.3 percent in the last quarter of 2011, and average 6.6 percent during the final three months of 2012.


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