Mortgage rates drop for the third week in a row

Probably, almost everyone thinking about buying real estate knows that mortgage rates are linked to the price of long bonds.  Thanks to the federal government’s stimulus money, there are lots and lots of the bonds on the market.

This week, the 30-year fixed-rate mortgage (FRM) averaged 5.14 percent, down from last week’s 5.20 percent, reports Freddie Mac. Last year at this time, it was 6.26 percent.  As for the 15-year FRM, it, too, was down, averaging 4.63 percent in comparison with 4.69 percent a week ago and 5.78 percent a year ago.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) were 4.83 percent this week, up slightly from last week’s 4.82 percent but lower than 5.80 percent one year earlier.

One-year Treasury-indexed ARMs averaged 4.76 percent this week, off from 4.82 percent; at this time last year, it was 5.10 percent.

For a 30-year fixed-rate mortgage, the rate reduction over the past five weeks translates into a monthly payment saving of $56 on a $200,000 loan, according to Freddie Mac.

(You’ll find extensive news about mortgages and the housing market in my biweekly newsletter.)

Declining rates have proved to motivate consumers, especially those interested in refinancing their existing mortgage. Continue reading