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March 21, 2008
Long-term mortgage rates fell sharply this week due to a variety of economic factors.
According to Freddie Mac’s Primary Mortgage Market Survey, the 30-year fixed-rate mortgage averaged 5.87 compared with an average of 6.13 percent last week. Last year at this time, the 30-year loan averaged 6.16 percent.
The 15-year loan, popular for refinancings, stood at 5.27 percent versus last week’s average of 5.60 percent. A year ago at this time, the 15-year fixed rate mortgage was averaging 5.90 percent.
Five-year Treasury-indexed hybrid adjustable-rate mortgages, or ARMs, averaged 5.56 percent this week. Last week, it averaged 5.58 percent and a year ago, it was 5.91 percent.
The average for 1-year Treasury-indexed ARMs was 5.15 percent this week, inching up from 5.14 percent last week. At this time last year, the 1-year ARM averaged 5.40 percent
“Mortgage rates fell this week as various actions were taken to improve market liquidity,” said Frank Nothaft, Freddie Mac vice president and chief economist. “In addition, the inflation report from the Consumer Price Index (CPI) reflected weaker price increases than consensus expectations. Unchanged in February both including and excluding food and energy costs, it is the first time the core CPI did not report a monthly increase since November 2006. “
Meanwhile, retail sales fell by 0.6 percent in February, contrary to the consensus forecast of a 0.2 percent increase, signaling that the condition of the economy might be weaker than previously thought.
Slowing consumer spending and weak employment conditions are among the concerns behind the Fed’s decision to lower the target federal funds rate by 0.75 percentage points in the most recent Federal Open Market Committee meeting.
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May 9 2008
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