The average rate for both the 30-year and 15-year fixed rate mortgage fell by two basis points according to the Freddie Mac survey for the week of May 19, making it five consecutive weeks of declines.
Frank Nothaft, chief economist for Freddie Mac, said the small decline is an indicator that the financial markets are trying to determine the current state of the U.S. economy from the mixed bag of data it received.
"Industrial production was unchanged in April owing to disruptions in automobile parts supplies due to the earthquake and tsunami in Japan. Netting out automobiles and gasoline, retail sales rose 0.2% in April, which was less than a third of the increase in March and the weakest growth since December 2010. However, consumer confidence, as measured by the University of Michigan, rose above the market consensus in May to the highest reading since February," he said.
Housing market data was also mixed, as Nothaft pointed to declines in single-family residential construction as well as low homebuilder confidence. This was offset by five weeks of increases in the Mortgage Bankers Association's application index, which is being driven by low rates and an increase in refinancings.
The 30-year fixed-rate mortgage averaged 4.61%, down from last week when it averaged 4.63%. Last year at this time, the 30-year FRM averaged 4.84%. The 15-year FRM averaged 3.80%, down from last week when it averaged 3.82%. A year ago at this time, the 15-year FRM averaged 4.24%. Both loans averaged 0.7 points.
On the other hand, adjustable-rate mortgages saw increases in their average interest rates. The 5-year Treasury-indexed hybrid ARM averaged 3.48% up from last week when it averaged 3.41%. A year ago, the 5-year ARM averaged 3.91%. The 1-year Treasury-indexed ARM averaged 3.15%, up from last week when it averaged 3.11%. At this time last year, the 1-year ARM averaged 4.00%. Both loans averaged 0.6 points.
