Mortgage Interest Rates Fall 10 Basis Points to 6.07%

(January 3rd, 2008)

Mortgage interest rates fell to their lowest levels in 4 weeks thanks to the bad news revolving around the economy, the subprime mess in the mortgage market as well as high inflation in oil, gas, groceries & commodities. The average interest rate on a 30 year fixed term mortgage fell 10 basis points from 6.17% to 6.07% (Source: Freddie Mac). The average origination fees and discount points of 0.5% remained unchanged from the last survey conducted by Freddie Mac. The average mortgage interest rate on a 30 year fixed term at this time last year was 6.18%.

Frank Nothaft, VP & Chief Economist at Freddie Mac said the new year 2008 has begun with mixed signals about the direction of the overall US economy and the mortgage market. He quotes, "On the downside, the Institute for Supply Management's index of manufacturing activity showed significant contraction in this sector, perhaps a harbinger of a more substantial economic slowdown to begin this year."

He adds, "On the upside, the Conference Board reported that consumer confidence rose in December for the first time in five months, with more positive expectations for the next six months." New home sales in November 2007 fell to the lowest level since April 1995. However, existing home sales rose by a small percentage. Freddie Mac expects the American housing market to get even worse, before it gets better. The firm expects total home sale values falling in the first 2 quarters of 2008, then making a slow recovery.

New and existing home sales are expected to be 5.09 million in 2008, down 11% from the levels in 2007. Here's how the other mortgage interest rates played out:

- Rates on 15 year fixed term mortgages fell 11 basis points to 5.68%.

- Rates on five-year Treasury-indexed adjustable-rate mortgages (ARMs) fell 12 basis points to 5.78%.

- Rates on one-year Treasury-indexed ARMs fell 6 basis points to 5.47%.

Note: Freddie Mac surveys mortgage loan holders with mortgages of less than $417,000 and only those borrowers who have good or excellent credit. Freddie Mac does NOT survey jumbo loans of greater than $417,000 or to borrowers with poor credit.