By Ruth Mantell
WASHINGTON (MarketWatch) — The average rate on the 30-year fixed-rate mortgage declined to 4.71% in the week ending May 5, hitting the lowest level since January, down from 4.78% in the prior week, according to a survey released Thursday by Freddie Mac, a buyer of residential mortgages. Last year, the rate was at 5.00%. To obtain the latest rate, payment of an average 0.7 point was required. A point is 1% of the mortgage amount, charged in prepaid interest. “Weaker economic data reports reduced Treasury bond yields and allowed mortgage rates to drift lower for the third consecutive week,” said Frank Nothaft, chief economist at Freddie Mac, in a statement. The rate for 15-year fixed-rate mortgages averaged 3.89% in the latest week, down from 3.97% in the prior week. The rate on the 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.47%, down from 3.51%. The 1-year Treasury-indexed ARM averaged 3.14%, down from 3.15%.
Note from TMN: This is good news although I expect rates to rise at QE2 ends this summer. Our current problem is not the rates themselves but the underwriter guidelines which continue to be very strict. We certainly needed some correction in the guidelines but the pendulum swung so far that it is nearly impossible even for well qualified buyers to find financing. We need a little more common sense from the lenders to revive the housing market.