30-year mortgage rate falls for the ninth week

Benchmark mortgage sets third consecutive low in Freddie Mac survey

By Amy Hoak, MarketWatch


CHICAGO (MarketWatch) -- The average rate on 30-year fixed-rate mortgages fell for the ninth week in a row this week, setting another record low, according to Freddie Mac's weekly survey released on Wednesday.

The 30-year fixed-rate mortgage averaged 5.10% for the week ending Dec. 31, down from 5.14% last week and 6.07% a year ago. The mortgage rate hasn't been lower since Freddie Mac started the Primary Mortgage Market Survey in 1971. The survey covers conventional, conforming mortgages.

Rates on 15-year fixed-rate mortgages also fell, averaging 4.83% this week, down from 4.91% last week and 5.68% a year ago. The mortgage hasn't been lower since March 25, 2004, when it averaged 4.70%.

Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 5.57%, up from 5.49% last week. The ARM averaged 5.78% a year ago. And 1-year Treasury-indexed ARMs averaged 4.85%, down from last week's 4.95%. The ARM averaged 5.47% a year ago.

To obtain the rates, the 30-year and 15-year fixed-rate mortgages and the 5-year ARM required payment of an average 0.7 point. The 1-year ARM required payment of an average 0.5 point. A point is 1% of the total mortgage amount, charged as prepaid interest.

"Interest rates for 30-year fixed-rate mortgages fell for the ninth straight week and represented a third consecutive all time record low since Freddie Mac's survey began in April 1971," said Frank Nothaft, Freddie Mac chief economist, in a news release. "Since the end of October of this year, these rates have declined by about [1.33] percentage points, or payment savings of approximately $173 a month for a $200,000 loan," he said.

"As a result, the number of refinance applications for conventional mortgages jumped over 500% between the weeks ending on Oct. 31 and Dec. 26," Nothaft said. According to MBA's weekly survey, overall mortgage applications were up 155% last week, compared with the same week in 2007.

Lower rates and falling home prices are making homeownership more affordable, Nothaft said.

"For instance, house prices fell 18% over the 12-month period ending in October, according to the S&P/Case-Shiller 20-city composite index. Every city posted a second consecutive month of decline in October. From its peak set in July 2006, the composite index is down 23.4%," he said.


Source

People go for refinance to save their money, they set for new record low.