The cost of taking out a 30-year fixed-rate mortgage
edged up slightly this week, while rates on 15-year loans popular with borrowers
who are refinancing registered an almost imperceptible drop. Both fixed-rate
and adjustable-rate mortgage (ARM) loans remain at or near historic lows, with
rates on 1-year Treasury-indexed ARM loans hitting a new low, Freddie Mac said
in releasing the results of its latest Primary Mortgage Market Survey.
Rates on 30-year
fixed-rate mortgages averaged 3.37 percent with an average 0.7 point for the
week ending Dec. 20, up from 3.32 percent last week but down from 3.91 percent a
year ago. Rates on 30-year fixed-rate loans hit a low in Freddie Mac records
dating to 1971 of 3.31 percent during the week ending Nov. 21.
15-year fixed-rate loans, rates averaged 2.65 percent with an average 0.7 point,
down from 2.66 percent last week and 3.21 percent a year ago. Rates on 15-year
fixed-rate loans hit a low in Freddie Mac records dating to 1991 of 2.63 percent
during the week ending Nov. 21.
Rates on 5-year Treasury-indexed hybrid
ARM loans averaged 2.71 percent with an average 0.7 point, up from 2.70 percent
last week but down from 2.85 percent a year ago. Rates on five-year ARM loans
hit a low in records dating to 2005 of 2.69 percent during the week ending Dec.
For 1-year Treasury-indexed ARM loans, rates averaged 2.52 percent
this week with an average 0.4 point, down from 2.52 percent last week and 2.77
percent a year ago. That's a new low in Freddie Mac records dating to 1984.
Looking back a week, a survey by the Mortgage Bankers Association showed demand for
purchase loans during the week ending Dec. 14 falling by a seasonally adjusted 5
percent from the week before, but up 9 percent from a year ago. The MBA's survey
showed ARM loans only accounted for 3 percent of mortgage applications, and that
83 percent of all home loan requests were for refinancing.
In their latest forecast, Fannie Mae economists said they expect rates
on 30-year fixed-rate mortgage to average 3.4 percent next year, down from 3.7
percent in 2012, largely as a result of the Federal Reserve's continued efforts to keep a lid on mortgage and long-term
The Fed is buying $40 billion in mortgage-backed
securities (MBS) issued by Fannie Mae and Freddie Mac each month. The artificial
demand created by the Fed's open-ended program has propped up MBS prices and
suppressed their yields.
The Fed has said the program -- which also
includes $45 billion in monthly purchases of long-term Treasurys -- will
continue until there is substantial improvement in unemployment, although it may
scale back the size and pace of its purchases.
Fannie Mae economists
expect existing-home sales to grow by 9.6 percent next year, that new-home sales
will surge by 19.5 percent, and that single-family housing starts will grow by
25.7 percent as the housing recovery picks up steam.