Interest Rates Slip From Economic News

Today Freddie Mac released the results of its Primary Mortgage Market Survey (PMMS) in which the 30-year fixed-rate mortgage (FRM) averaged 5.98 percent with an average 0.5 point for the week ending May 22, 2008, down from last week when it averaged 6.01 percent. Last year at this time, the 30-year FRM averaged 6.37 percent.

The 15-year FRM this week averaged 5.55 percent with an average 0.6 point, down from last week when it averaged 5.60 percent. A year ago at this time, the 15-year FRM averaged 6.06 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.61 percent this week, with an average 0.6 point, up from last week when it averaged 5.57 percent. A year ago, the 5-year ARM averaged 6.02 percent.

One-year Treasury-indexed ARMs averaged 5.24 percent this week with an average 0.6 point, up from last week when it was 5.18 percent. At this time last year, the 1-year ARM averaged 5.64 percent.

(Average commitment rates should be reported along with average fees and points to reflect the total cost of obtaining the mortgage.)

"Interest rates for fixed-rate mortgages fell slightly this week on news of both weaker industrial production in April and consumer sentiment falling in May to its lowest level since June 1980," said Frank Nothaft, Freddie Mac vice president and chief economist. "ARM rates, however, rose slightly on market forecasts that the Federal Reserve (Fed) may not pursue any more rate cuts over the near term. For instance, the federal funds futures market suggests virtually no change in monetary policy over the next few months and the Fed viewed the last rate cut to be a "close call," according to the minutes of its most recent policy Committee meeting.

"Housing woes still plague the economy. Although housing starts unexpectedly rose in April, all of the gains were in multifamily properties. New construction on one-unit homes fell to 692,000 homes (annualized), which was the least since January 1991 and almost 62 percent below the peak set in November 2005. In addition, homebuilder confidence matched an all-time record low in May."