Fixed Rates Decline Further

The average 30-year fixed mortgage rate fell from 5.77% to 5.71% over the seven-day period ended Sept. 1, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate decreased from 5.35% to 5.32%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages was unchanged at 5.30%, and the average rate for one-year Treasury-indexed ARMs declined from 4.56% to 4.48%. Fees and points averaged 0.6 of a point for 30-year fixed-rate mortgages and hybrid ARMs, 0.5 of a point for 15-year FRMs, and 0.7 of a point for one-year ARMs. "Market jitters about high energy costs and the spillover into other sectors of the economy have led to a decline in bond yields, which typically means lower mortgage rates," said Frank Nothaft, Freddie Mac's chief economist. "And speculation that the Federal Reserve may soon take a break in raising short-term rates reduces upward pressure on long- and short-term interest rates." Moreover, the devastation from Hurricane Katrina and the "echo effects" on future energy prices may mean mortgage rates will fall even further, he said. A year ago, the average 30-year and 15-year fixed rates were 5.77% and 5.15%, respectively, and the average one-year ARM rate was 3.97%, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.