Fixed rates hit a new low

Another record low for fixed-rate mortgages

But rates on adjustable-rate mortgages are on the rise: Freddie Mac

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By Amy Hoak, MarketWatch

CHICAGO (MarketWatch) — Fixed-rate mortgage rates hit yet another set of record lows this week, with the 30-year fixed-rate mortgage averaging 3.79% in Freddie Mac’s weekly survey of conforming mortgage rates.

The mortgage averaged 3.83% last week and 4.61% a year ago.
“The European debt crisis overshadowed improving economic indicators for the U.S. and allowed Treasury bond yields and fixed mortgage rates to ease for another week,” said Frank Nothaft, vice president and chief economist, Freddie Mac, in a news release.
The 15-year fixed-rate mortgage averaged a record 3.04% for the week ending May 17, down from 3.05% last week and 3.8% a year ago.

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But rates on adjustable-rate mortgages ticked up this week, with the 5-year Treasury-indexed hybrid adjustable-rate mortgage averaging 2.83%, up from 2.81% last week; the ARM averaged 3.48% a year ago. And 1-year Treasury-indexed ARMs averaged 2.78% this week, up from 2.73% last week; the ARM averaged 3.15% a year ago.
To obtain the rates, the fixed-rate mortgages required payment of an average 0.7 point, while the 5-year ARM required an average 0.6 point and the 1-year ARM required an average 0.5 point. A point is 1% of the mortgage amount, charged as prepaid interest.
In his comments, Nothaft also pointed out some good news in the home construction industry.
“Housing starts rose to an annualized rate of 717,000 homes in April, well above the market consensus forecast, and construction on one-family homes increased to its strongest pace in three months. Moreover, home-builder confidence in May reached its highest reading since January 2008 according to the NAHB/Wells Fargo Housing Market Index,” he said.