Adjustable-rate mortgage loans hit new lows this week and fixed-rate mortgages remained near historic lows for a fifth consecutive week, Freddie Mac said in releasing the results of its weekly Primary Mortgage Market Survey.

Looking back a week, a separate survey by the Mortgage Bankers Association showed demand for purchase loans falling by a seasonally adjusted 0.8 percent from the week before.

The MBA’s Weekly Mortgage Applications Survey for the week ending Nov. 25 — which also included an adjustment to account for the Thanksgiving holiday — showed demand for purchase loans was down 18.2 percent from the same week a year ago.

Freddie Mac’s survey showed rates on 30-year fixed-rate mortgage (FRM) averaging 4 percent with an average 0.7 point for the week ending Dec. 1, up from 3.98 percent last week but down from 4.46 percent a year ago.

Rates on 30-year fixed-rate loans hit a 2011 high of 5.05 percent in February, before falling to an all-time low in records dating to 1971 of 3.94 percent during the week ending Oct. 6.

For 15-year fixed-rate loans, rates averaged 3.3 percent with an average 0.8 point, unchanged from last week and well below the 3.81 percent average at the same time a year ago. Rates on 15-year reached a 2011 high of 4.29 percent in February, before falling to an all-time low in records dating to 1991 of 3.26 percent in October.

Rates on  five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans averaged 2.9 percent this week with an average 0.6 point, a new all-time low in records dating to 2005. At this time a year ago, five-year ARM loans averaged 3.49 percent, before climbing to a 2011 high of 3.92 percent in February.

Rates on one-year Treasury-indexed ARM averaged 2.78 percent this week with an average 0.6 point, a new all-time low in records dating to 1984. At this time last year, rates on one-year ARMs averaged 3.25 percent before climbing to a 2011 high of 3.4 percent in February.

Freddie Mac chief economist Frank Nothaft said more optimistic consumers, lower house prices, and bargain mortgage rates may have contributed to a 10.4 percent jump in pending home sales in October to the strongest pace since November 2010 — a trend that "may bode well for future home sales."

Falling home prices make homes more affordable, and low interest rates increase homebuyer’s purchasing power. But falling home prices can also make would-be homebuyers nervous that they will pay too much if they buy before prices have bottomed.

Nothaft noted that the S&P/Case-Shiller 20-city composite index fell for the fifth consecutive month in September to the lowest reading since April 2003.

The latest numbers from data aggregator CoreLogic suggest that 22.1 percent of homeowners with mortgages owed more than their homes were worth at the end of September — translating to about 10.7 million "underwater" homes. Many of those homeowners are unable to sell or refinance their homes because they are deeply underwater.

Core logic said underwater borrowers with home equity loans have an average of $309,000 in total mortgage debt and that their homes are worth $84,000 less than that, on average, for a combined loan-to-value ratio of 137 percent.

Underwater borrowers who don’t have home equity loans owe $222,000 on average, or about $52,000 more than their homes are worth, for an average LTV of 131 percent.

A homebuyer who makes a 20 percent down payment has an LTV of about 80 percent. Lenders usually require mortgage insurance for loans with higher LTVs.

Freddie Mac’s rate survey is based on loans offered to borrowers with good credit scores who will be making down payments of at least 20 percent. Borrowers with blemished credit or making smaller down payments can expect to pay higher rates.

Show Comments Hide Comments


Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
Thank you for subscribing to Morning Headlines.
Back to top
We're giving away 3 free ICLV tickets at Connect Now tomorrow. Register and attend live for your chance to win!REGISTER×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription