Industry News

Mortgage Rate Decline Resumed After Last Week's Lull According To Freddie Mac Weekly Survey

June 21, 2002

One-Year Adjustable Rate Continued Its Decline As Well

McLean, VA ? In Freddie Mac's Primary Mortgage Market Survey, the 30-year fixed-rate mortgage (FRM) averaged 6.63 percent, with an average 0.5 point, for the week ending June 21, 2002, dropping from 6.71 percent last week. Last year at this time, the 30-year FRM averaged 7.11 percent. The 30-year FRM has not been lower since the week ending November 16, 2001, when it averaged 6.51 percent.

The average for the 15-year FRM this week is 6.08 percent, with an average 0.5 point, down from last week's average of 6.17 percent. A year ago, the 15-year FRM averaged 6.65 percent.

One-year Treasury-indexed adjustable-rate mortgages (ARMs) averaged 4.60 percent this week, with an average 0.5 point, down from last week's average of 4.67 percent. This time last year, the one-year ARM averaged 5.74 percent. The 1-year ARM has not been lower since the week ending March 11, 1994, when it averaged 4.51 percent.

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

"There is a flight to quality occurring at the present time with investors seeking refuge from the uncertainties of the Mideast and declining stock markets," said Frank Nothaft, Freddie Mac's chief economist. "This investment in US Treasury bonds lowers bond yields, causing other interest rates to follow suit, which explains the drop in mortgage rates to near record lows this week.

"Continuing low mortgage rates, however, are a boon to the housing industry. For example, figures for housing starts in May surged by a stronger than expected 12 percent to a 1.73 million units, according to the Commerce Department."

Source: Freddie Mac

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