Mortgage Rates Fall to 2010 Low

The Wall Street Journal

14 May  2010

Home-mortgage rates fell to the lowest level of the year in recent days as Treasury yields slumped due to investors seeking a haven following last week’s stock-market turmoil, according to Freddie Mac’s weekly survey of mortgage rates.

Mortgage rates tend to follow Treasury yields. The benchmark 10-year note dropped to a five-month intraday low last Thursday as the Dow Jones Industrial Average suffered an intraday drop of nearly 1,000 points.

The latest week was the fifth in a row that interest rates on fixed-rate mortgages fell, noted Freddie Chief Economist Frank Nothaft.

The 30-year fixed-rate mortgage averaged 4.93% for the week ended Thursday, down from last week’s 5% average but up from 4.86% a year ago. Rates on 15-year fixed-rate mortgages were 4.3%, compared with 4.36% and 4.27%, respectively.

Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 3.95%, a low since Freddie began tracking such mortgages in early 2005, down from last week’s 3.97% and 4.82% a year earlier. One-year Treasury-indexed ARMs were 4.02%, down from 4.07% and 4.71%, respectively.

To obtain the rates, the 30-year fixed required payment of an average 0.7 point and the other mortgages required an average 0.6 point. A point is 1% of the loan amount, charged as prepaid interest.