U.S. Mortgage Rates Rise Despite Non-Prime Market Woes

by Amy Lillard

Fixed-rate mortgage rates dropped in the week ending August 16, 2007, according to finance company Freddie Mac. Their weekly Primary Mortgage Market Survey® was released Thursday.

"Interest rates on prime conforming fixed-rate mortgages ticked up a little in the past week, in line with 10-year Treasury rates movements and retracing part of last week's decline," said Frank Nothaft, Freddie Mac vice president and chief economist. "Problems in the non-prime mortgage market where funds are expensive and hard-to-get have not affected the prime conforming market."

This week's survey indicates 30 year fixed mortgage rates averaged 6.62 percent, a rise from last week's average of 6.59 percent. Last year at this time, the 30-year fixed-rate mortgage averaged 6.52 percent.

Fixed mortgage rates for 15-year terms averaged 6.30 percent, a jump from last week's average of 6.25. A year ago, the 15-year fixed-rate mortgage averaged 6.20 percent.

Averages for adjustable-rate mortgages (ARMs) also rose this week. Five-year ARMs averaged 6.35 percent this week, up from last week's average of 6.33 percent. At this time last year, the five-year ARM also averaged 6.18 percent.
One-year ARMs averaged 5.67 percent this week, an increase from last week's average of 5.65 percent. Last year, the one-year ARM averaged 5.65 percent.
Freddie Mac said that to obtain these rates lenders charged an average 0.4-point fee for 30-year fixed-rate mortgages. Lenders charged a 0.5-point fee for 15-year fixed-rate mortgages and for five-year ARMs. One-year ARMs included a 0.6-point fee.

"This week's data releases included the Producer Price Index and Consumer Price Index for July," said Nothaft. "Core inflation at the wholesale level increased 0.1 percent in July, or 2.3 percent year-over-year, below market expectations, while core inflation at the retail level grew by 0.2 percent, or 2.2 percent year-over-year, in line with what had been expected."

Freddie Mac is a mortgage finance company established by Congress in 1970. The company buys mortgages and mortgage-related securities and packages them to sell to investors or to hold in its own portfolio. They release their summary of average mortgage rates weekly.