Low Inflation Threat Allows Long-term Mortgage Rates To Drift Even Lower This Week

July 1, 2005

Short-Term Expected To Rise As Fed Acts To Keep Inflation At Bay

McLean, VA – Freddie Mac (NYSE:FRE) results of its Primary Mortgage Market SurveySM (PMMSSM)found that the 30-year fixed-rate mortgage (FRM) averaged 5.53 percent, with an average 0.6 point, for the week ending June 30, 2005, down from last week when it averaged 5.57 percent. Last year at this time, the 30-year FRM averaged 6.21 percent.

The average for the 15-year FRM this week is 5.12 percent, with an average 0.6 point, down from last week when it averaged 5.16 percent. A year ago, the 15-year FRM averaged 5.62 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.06 percent this week, with an average 0.6 point, up slightly from last week when it averaged 5.05 percent. There is no annual historical information for last year since Freddie Mac only began tracking this mortgage rate at the start of this year.

One-year Treasury-indexed ARMs averaged 4.24 percent this week, with an average 0.7 point, also up slightly from last week when it averaged 4.23 percent. At this time last year, the one-year ARM averaged 4.19 percent.

“With still little or no threat of inflation to be found, long-term mortgage rates this week had some breathing room and that allowed rates to drift a little lower,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Short-term rates, though, may be another matter, since the Federal Reserve is expected to continue raising its target for the federal funds rate at least a few more times this year.

“Meanwhile, housing constituted 22 percent of the growth in real Gross Domestic Product (GDP) in the first quarter of this year. With mortgage rates hovering near historic lows, housing will undoubtedly continue to add to economic growth in the foreseeable future.”





Source: Freddie Mac


Contact ALTA at 202-296-3671 or communications@alta.org.

SoftPro, based in Raleigh, NC, offers a mature suite of products, designed specifically for the closing and title industry. Our mission is to serve our client base, with best-in-class products and services. Our products are modular so we don't force you to buy anything you don't need. You can always add on as your business grows. Unlike other software companies, we view the sale as the beginning of the relationship rather than the end. North American Title Insurance Company (NATIC) is a seasoned title insurance underwriter, helping title agents to achieve their individual business goals for more than 50 years. Today, the company conducts real estate settlement services in 39 states and the District of Columbia through a network of experienced, independent agents.