Thursday, January 7, 2010

Mortgage interest rates reverse course

Auto loan defaults on the rise
Procrastinating home loan borrowers got a reprieve this week as interest rates inched down after rising all through December.

by Broderick Perkins
© 2009 DeadlineNews.Com

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Deadline Newsroom - Procrastinating home buyers and home owners seeking a refinance got a reprieve this week as mortgage interest rates inched down after rising weekly through December last year.

For the week ending Jan. 7, 2010 the average interest rate on a 30-year, fixed-rate mortgage (FRM) came in at 5.09 percent, with an average 0.7 point, down from 5.14 percent last week, according to Freddie Mac's weekly Primary Mortgage Market Survey (PMMS).

One point is one percent of the total amount financed.

The current average 30-year FRM, is up from 5.01 percent a year ago, Freddie said.

The 15-year FRM this week averaged 4.50 percent with an average 0.7 point, also down slightly from last week when it averaged 4.54 percent. A year ago at this time, the 15-year FRM averaged 4.62 percent.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.44 percent this week, with an average 0.6 point, unchanged from last week, but well off the 5.49 percent average a year ago.

Expect the year-to-year gap to narrow for ARM rates, but not before the second half of 2010, when the economy is expected to improve enough for Federal Reserve action.

"Current interest rates for fixed-rate mortgages are just about at their annual average for 2009, while ARM rates are considerably below their averages for last year," said Frank Nothaft, Freddie Mac vice president and chief economist.

He added, "As the economy strengthens further and the Federal Reserve decides to raise its overnight target rate, ARM rates will follow suit because they are typically tied to shorter-term interest rates."

Freddie Mac also reported the 1-year Treasury-indexed ARM averaged 4.31 percent this week, with an average 0.6 point, down from 4.33 percent last week and 4.95 percent a year ago.

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