Mortgage Rates Change Course, Decrease Slightly

Mortgage rates moved downward this week, with rates on the 30-year fixed-rate mortgages decreasing for the first time since early March, according to a Freddie Mac weekly survey.

The 30-year mortgage averaged 6.17 percent for the week ending April 18, down from its 6.22 percent average last week. The benchmark mortgage averaged 6.53 percent a year ago.

“Mortgage rates slipped following the latest reports of moderation in inflation rates from the core producer price and consumer price indexes,” Frank Nothaft, Freddie Mac chief economist, said.

“Excluding food and energy, the core inflation rate for consumer prices rose by 2.5 percent year-over-year, the smallest annual growth since May 2006. This helped calm markets and brought mortgage rates down.”

The 15-year fixed-rate mortgage exhibited a slighter decline over the week, averaging 5.89 percent, down from its 5.90 percent average last week. The mortgage averaged 6.17 percent a year ago.

Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 5.92 percent over the week, down slightly from last week’s 5.93 percent.

The ARM averaged 6.16 percent a year ago.

One-year Treasury-indexed ARMs, meanwhile, averaged 5.45 percent for the week, down from last week’s 5.47 percent average.

The ARM averaged 5.63 percent a year ago.

To obtain the rates quoted above, 30- and 15-year fixed-rate mortgages required payment of an average 0.5 points. The 5-year ARM required an average 0.6 points and the 1-year ARM required an average 0.7 points.

“The low home mortgage loan rates that have prevailed so far in 2007 may have a stabilizing effect on the housing sector,” Nothaft said.

Experts also point out that both housing starts and new permits for March came in above expectations. February’s housing starts numbers, however, were revised downward.

“Because of weather-induced fluctuations in housing market statistics, we will have to see what the numbers show later this spring to gauge whether the March readings are indeed a signal of market turnaround,” he said.

A separate survey released on Wednesday by the Mortgage Bankers Association found that home loan application volume decreased a seasonally adjusted 2.5 percent for the week ending April 13.

Volume was up 9.9 percent compared with the same week in 2006. The MBA survey covers about half of all U.S. residential mortgage originations.

SOURCE: MarketWatch