Thirty-Year Rate May Be Stabilizing After Steep Drop

Benchmark bond yield activity suggests the average rate for a 30-year fixed-rate conforming mortgage is stabilizing after dropping over the course of the past week to close to a three-month low. The benchmark 10-year Treasury yield, which is roughly indicative of mortgage rate direction, was at about 3.46% near noon on Aug.20, just slightly higher than where it was at the same time the day before. A steep drop in that benchmark yield had contributed to a decline in the average rate for a 30-year fixed-rate mortgage to 5.12% from 5.29% the week before and from 6.47% a year ago during the week ending Aug. 20, according to Freddie Mac's weekly primary market survey. "U.S. Treasury bond yields fell nearly a quarter of a percentage point over the week, and other long-term yields followed suit," said Frank Nothaft, Freddie Mac vice president and chief economist. "Interest rates on 30-year and 15-year fixed-rate mortgages fell to the lowest level since the end of May, while initial rates on 5/1 hybrid ARMs declined to levels not seen since January 2005." The average 15-year FRM rate fell to 4.56% from 4.68% a week ago and 6.00% from a year ago. The average rate for a five-year hybrid Treasury-indexed adjustable-rate mortgage slipped to 4.57% from 4.75% a week ago and 5.99% a year ago. Finally, the average one-year Treasury ARM rate dropped to 4.69% from 4.72% a week ago and 5.29% a year ago. Average points were 0.7 for 15- and 30-year FRMs, 0.6 for five-year hybrids and 0.5 for one-year ARMs.