Financial Markets Wary of Housing Market's Drag on Economic Growth
by Eileen B. Fitzpatrick
June 21, 2007
McLEAN, VA -- Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 6.69 percent with an average 0.5 point for the week ending June 21, 2007, down from last week when it averaged 6.74 percent. Last year at this time, the 30-year FRM averaged 6.71 percent.
The 15-year FRM this week averaged 6.37 percent with an average 05 point, down from last week when it averaged 6.43 percent. A year ago, the 15-year FRM averaged 6.36 percent.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 6.31 percent this week, with an average 0.6 point, down from last week when it averaged 6.37 percent. A year ago, the 5-year ARM averaged 6.32 percent.
One-year Treasury-indexed ARMs averaged 5.66 percent this week with an average 0.7 point, down from last week when it averaged 5.75 percent. At this time last year, the 1-year ARM averaged 5.75 percent.
(Average commitment rates should be reported along with average fees and points to reflect the total cost of obtaining the mortgage.)
“Mortgage rates eased this week due to market concerns that the housing market will be a longer drag on the economy,” said Frank Nothaft, Freddie Mac vice president and chief economist. “May’s housing starts fell for the first time in four months, while homebuilder optimism in June fell to a sixteen-year low.
“Thus far this year, the housing sector directly shaved 0.8 percentage points off real economic growth in the first quarter, compared to the 1.2 percentage points it lopped off growth in the second half of 2006.”
Freddie Mac is a stockholder-owned corporation established by Congress in 1970 to support homeownership and rental housing. Freddie Mac purchases single-family and multifamily residential mortgages and mortgage-related securities, which it finances primarily by issuing mortgage pass through securities and debt instruments in the capital markets. Over the years, Freddie Mac has made home possible more than 50 million times, ensuring financing for one in six homebuyers and more than four million renters. For additional information about Freddie Mac, visit: www.FreddieMac.com.
Freddie Mac defines its regions as follows:
Northeast: NY, NJ, PA, DE, MD, DC, VA, WV, ME, NH, VT, MA, RI, CT
Southeast: NC, SC, TN, KY, GA, AL, FL, MS, PR, VI
North Central: OH, IN, IL, MI, WI, MN, IA, ND, SD
Southwest: TX, LA, NM, OK, AR, MO, KS, CO, NE, WY
West: CA, AZ, NV, OR, WA, UT, ID, MT, HI, AK, GU
Freddie Mac's Primary Mortgage Market Survey (PMMS) is for informational purposes only and Freddie Mac is not responsible for business decisions made based on the reported results of the PMMS. Freddie Mac may change the methodology used to conduct the PMMS survey at any time and without notice.
DEFINITIONS
Commitment Rate is the interest rate a lender would charge to lend mortgage money to a qualified borrower exclusive of the fees and points required by the lender. This commitment rate applies only to conventional financing on conforming mortgages with loan-to-value rates of 80 percent or less.
ARM Index –is the One-year Treasury
Loan to Value Ratio (LTV) is the ratio of the loan amount of a mortgage loan to the lower of the appraisal value or purchase price of the property securing the loan.
Origination Fees and Discount Points are the total charged by the lender at settlement. One point equals one percent of the loan amount.
Margin is a fixed amount added to the underlying index to establish the fully indexed rate for an ARM.
Weighted Averages for the Primary Mortgage Market Survey have been adjusted as of October 26, 2006. The new weights use the dollar volume of conventional mortgage originations within the 1-unit Freddie Mac loan limit as reported under the Home Mortgage Disclosure Act (HMDA) for 2005. The weights are listed in the table below.
PRIMARY MORTGAGE MARKET SURVEY RESULTS
MEDIA CONTACT:
Eileen Fitzpatrick
703.903.2446
eileen_Fitzpatrick@freddiemac.com