Record Mortgages Rates Continue, Freddie Hikes Origination Forecast
Once again, both the 30- and 15-year fixed-rate mortgages, as well as the five-year Treasury-indexed adjustable-rate mortgage, hit all-time record lows, Freddie Mac reported in its weekly Primary Mortgage Market Survey released July 19. The report credits the record low rates with fueling housing demand.
The 30-year fixed-rate fell 0.03 percentage points from the previous week to 3.53 percent (down from 4.52 percent a year ago). The 15-year fixed-rate also slipped 0.03 percentage points to 2.83 percent (down from 3.66 percent a year ago). The average 30-year fixed-rate has been below 4 percent in all but one week in 2012, while the average 15-year fixed-rate has been below 3 percent for the past eight consecutive weeks.
The five-year Treasury-indexed adjustable-rate mortgage fell 0.05 percentage points from the previous week to 2.69 percent (down from 3.27 percent a year ago). However, the one-year adjustable-rate remained steady at 2.69 percent (down from 2.97 percent a year ago).
These record-low interest rates encouraged Freddie to hike its loan production forecast by $200 billion to $1.65 trillion for 2012.
Freddie’s forecast outshines both Fannie Mae (which forecast $1.34 trillion in loan originations for the year) and the Mortgage Bankers Association (which forecast $1.29 trillion).
If Freddie’s expectations prove accurate, 2012 will be a better year for loan origination than 2011 when funding topped $1.45 trillion.
“With little signs of inflation and the Federal Reserve's ‘Operation Twist’ keeping U.S. Treasury bond yields in check, fixed mortgage rates are remaining low and helping to stir the housing market,” Freddie Mac Chief Economist Frank Nothaft said in a news release. “For instance, the 12-month growth rate in the core Consumer Price Index has been in a narrow 2.1 to 2.3 percent band over the past nine months ending in June.”
View Freddie Mac’s weekly Primary Mortgage Market Survey.