Mortgage Interest Rates Fall on New Rescue Plan

Nov 27th, 2008 @ 11:26 AM by Amber Nelson

Interest rates on long-term U.S. home loans fell in the latest week, a reaction to the newly announced Bush administration’s $800 billion bailout package to provide more liquidity for consumer and mortgage debt markets, according to data from Freddie Mac.

“Interest rates for 30-year fixed-rate mortgages fell for the fourth consecutive week as signs the overall economy is flagging lowered most interest rates market-wide,” said Frank Nothaft, Freddie Mac vice president and chief economist. “And economic growth in the third quarter was revised downward this week, led by the first decline in consumer spending since the fourth quarter of 1991 and the largest drop since the second quarter of 1980.”

As a high point, Nothaft noted, “However, declining house prices and low mortgage rates have raised housing affordability in September to the highest level since February of this year, according to the National Association of Realtors (NAR).”

The average rate on a 30-year fixed rate mortgage dropped to an almost two-month low at 5.97 percent, excluding points, during the week ended Nov. 26. Last week the rate averaged 6.04 percent, although one year ago, the rate on a 30-year home loan was lower still at 5.94 percent.

Fifteen-year fixed rate loans carried an average rate of 5.74 percent, a slight increase from 5.73 percent the previous week. Last year at this time, the average rate was 5.73 percent.

One-year Treasury-indexed adjustable rate mortgages fell to 5.18 percent, a decrease from 5.29 percent the week before. During the same week of 2007, the one-year ARM interest rate averaged 5.43 percent.

As interest rates dipped, making mortgage financing more attractive, the Mortgage Bankers Association (MBA) reported that its index of mortgage loan application volume rose 1.5 percent in the latest week, with an increase in home purchase loans offsetting a decrease in refinance requests.

About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.

Posted in Home Equity Loans, Mortgage Rates, Mortgage Refinancing, Mortgages
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