by Amy Lillard
Apr 16, 2009 - Fixed-rate mortgage rates fell again this week, and the 15-year fixed-rate mortgage hit an all-time low. The low rates are encouraging homeowners to refinance , and helping those who qualify for the Obama administration's Federal Mortgage Assistance Programs.
The benchmark 30-year fixed-rate mortgage averaged 4.82% in the week ending April 16, according to Freddie Mac's weekly survey. The 30-year fixed-rate mortgage averaged 4.87% last week and 5.88% a year ago.
Fifteen-year fixed-rate mortgages averaged 4.48%, the lowest for the mortgage since Freddie Mac began tracking it in 1991. The rate is down from 4.54% last week and 5.40% a year ago.
"The housing industry is starting to exhibit some positive signs, albeit scarce and too early to tell how permanent," Frank Nothaft, Freddie Mac vice president and chief economist, said in a news release. "In its April 15 regional economic report, the Federal Reserve reported that better-than-expected buyer traffic led to a scattered pickup in home sales in a number of its districts over the six-week period ending on April 6. Factors such as home-buyer tax credits, low mortgage rates, and more affordable prices were cited as leading to more potential buyers."
The 5-year Treasury-indexed hybrid adjustable-rate mortgage also hit a record low this week. The rate averaged 4.88%, the lowest since Freddie Mac began tracking it in 2005. The rate was 4.93% last week and 5.48% a year ago. At the same time, the 1-year Treasury-indexed ARMs bucked the trend and rose this week, averaging 4.91%, compared with 4.83% last week. The ARM averaged 5.10% a year ago.
To obtain the rates, the fixed-rate mortgages and the 5-year ARM required payment of an average 0.6 point. The 1-year ARM required an average 0.7 point. A point is 1% of the total mortgage amount, charged as prepaid interest.
The Obama administration's housing plan is based in part on refinancing, and these record low rates are encouraging borrowers to do just that. But they also offer additional refinancing assistance for those whose home values have dropped and who owe more than 80% of the loan. To qualify, homeowners must have a loan owned or guaranteed by Fannie Mae or Freddie Mac, and you must not have missed any loan payments in the past 12 months.
For additional help, the Obama administration is offering a loan-modification program for those struggling to make mortgage payments. The government provides incentives for lenders to lower monthly mortgage payments to 31% of their gross monthly income, either by lowering the interest rate, extending the term of the loan up to 40 years, or lowering the principal. To qualify, the loan must have originated on or before Jan. 1, 2009, the principal balance cannot exceed $729,750, and the home must be a primary residence.
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