Schuler Bauer Real Estate Services

Mortgage Rates

Mortgage rates have held rock steady throughout June at or near lows for the year, as interest rates on fixed-rate loans remained virtually unchanged this week for the fourth consecutive week, Freddie Mac said in releasing the results of its latest Primary Mortgage Market Survey.

A separate survey by the Mortgage Bankers Association showed demand for purchase loans was down slightly last week compared the week before but up from the same time a year ago.

Freddie Mac's survey of 125 lenders nationwide showed rates on 30-year fixed-rate mortgages averaging 4.51 percent with an average 0.7 point for the week ending June 30, virtually unchanged from 4.5 percent last week and down from 4.58 percent a year ago.


Rates on 30-year fixed-rate mortgages hit a 2011 low of 4.49 percent during the first week of June. After hitting an all-time low in Freddie Mac records dating to 1971 of 4.17 percent during the week ending Nov. 11, 2010, rates on 30-year fixed-rate loans surged back to a 2011 high of 5.05 percent in February.

For 15-year fixed-rate mortgages, rates averaged 3.69 percent with an average 0.7 point, unchanged from last week and only a hair above the 2011 low of 3.67 percent registered two weeks ago. At this time a year ago, the 15-year fixed-rate mortgage was 4.04 percent, before plunging to an all-time low in records dating back to 1991 of 3.57 percent in November. Rates on 15-year fixed-rate loans hit a 2011 high of 4.29 percent in February.

Rates on 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans averaged 3.22 percent with an average 0.6 point, down from 3.25 percent last week and 3.79 percent a year ago. Rates on 5-year ARM loans hit an all-time low in records dating to 2005 of 3.25 percent in November, before rising to a 2011 high of 3.92 percent in February.

For 1-year Treasury-indexed ARMs, rates averaged 2.97 percent with an average 0.6 point, down from 2.99 percent last week and 3.80 percent a year ago.

In a separate survey, the MBA said applications for purchase loans were down by a seasonally adjusted 3 percent last week when compared to the week before, but up 4.5 percent from the same time a year ago.

In a June 15 forecast, MBA economists said they expect rates on 30-year fixed-rate mortgages to average 4.9 percent during the third quarter (July, August and September) and climb to an average of 5.2 percent during the final three months of the year. The forecast calls for a gradual rise in rates all next year, to an average of 5.7 percent during the fourth quarter of 2012.

Most funding for mortgage loans comes from investors who purchase mortgage backed securities (MBS). Mortgage rates depend on both demand for mortgage loans, and the supply of investment dollars into MBS.

Because payments on most U.S. MBS are guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae, they are seen as a safe haven in times of economic uncertainty.

Increased investor demand for MBS pushes mortgage rates down, and rates often go up when investors regain confidence in stock markets and MBS fall out of favor.




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