Housing Bubble

Mortgage rates continue to fall

May 22, 2003

McLean, VA – In Freddie Mac's Primary Mortgage Market Survey, the 30-year fixed-rate mortgage (FRM) averaged 5.34 percent, with an average 0.7 point, for the week ending May 23, 2003, slipping from 5.45 percent last week. Last year at this time, the 30-year FRM averaged 6.81 percent. This figure sets another record low.

The average for the 15-year FRM this week is 4.73 percent, with an average 0.7 point, down from last week's average of 4.84 percent. A year ago, the 15-year FRM averaged 6.28 percent. This figure sets another record low.

One-year Treasury-indexed adjustable-rate mortgages (ARMs) averaged 3.61 percent this week, with an average 0.7 point, down from last week's average of 3.67 percent. At this time last year, the one-year ARM averaged 4.85 percent. This figure sets another record low as well.

(Average commitment rates should be reported along with average fees and points to reflect the total cost of obtaining the mortgage.)

"Long-term bond yields dropped leading up to Federal Reserve Chairman Greenspan's testimony to Congress over speculation of what he may say about deflation and over the possibility of the Federal Reserve buying long-term Treasury bonds to fight it," said Frank Nothaft, Freddie Mac chief economist. "Consequently, interest rates for fixed-rate mortgages and one-year ARMs fell to another record low this week.

"With mortgage rates continuing to slip, a new wave of refinancing has appeared. According to the Mortgage Bankers Association of America, applications for refinance jumped 15 percent last week, near the record high set in March. And according to Freddie Mac's quarterly refinance review, the average age of a refinanced loan fell to 1.9 years in the first quarter of this year."

Source: Freddie Mac