Wall Street Roller Coaster Ride Drops Mortgage Rates to New Yearly Low

Freddie Mac has released the results of its Primary Mortgage Market Survey (PMMS), showing mortgage rates continuing to decline with the 30-year fixed-rate mortgage (FRM) averaging 4.32 percent with an average 0.7 point for the week ending Aug. 11, 2011, down from last week when it averaged 4.39 percent. Last year at this time, the 30-year FRM averaged 4.44 percent. The 15-year FRM this week averaged 3.5 percent with an average 0.7 point, down from last week when it also averaged 3.54 percent. A year ago at this time, the 15-year FRM averaged 3.92 percent. "Renewed market concerns about the European debt markets led investors to shift funds into U.S. Treasuries, pushing long-term yields lower," said Frank Nothaft, vice president and chief economist for Freddie Mac. "Further, in its Aug. 9th Federal Open Market Committee statement, the Federal Reserve noted that economic growth so far this year had been considerably slower than it expected and that overall labor market conditions had deteriorated in recent months, leading the Committee to conclude that an exceptionally low federal funds rate should be maintained at least through mid-2013. These developments helped to ease mortgage rates lower this week." The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.13 percent this week, with an average 0.5 point, down from last week when it averaged 3.18 percent. A year ago, the five-year ARM averaged 3.56 percent. The one-year Treasury-indexed ARM averaged 2.89 percent this week with an average 0.5 point, down from last week when it averaged 3.02 percent. At this time last year, the one-year ARM averaged 3.53 percent. "Lower mortgage rates will help to maintain the high degree of homebuyer affordability in the market," said Nothaft. "The National Association of Realtors reported that its affordability index over the past three quarters has indicated the highest affordability since the inception of the index in 1970."