Mortgage Interest Rates Continue to Decrease

The average interest rates for both conventional 30-year and 15-year fixed-rate mortgage loans of $417,000 or less fell in October, the Federal Housing Finance Agency (FHFA)

The average interest rates for both conventional 30-year and 15-year fixed-rate mortgage loans of $417,000 or less fell in October, the Federal Housing Finance Agency (FHFA) reported Tuesday.

According to the report, interest rates on conventional 30-year fixed-rate loans of $417,000 or less fell 13 basis points to 5.10 percent last month, and 15-year fixed rate loans for the same amount dropped 15 basis points to 4.62 percent. Calculated from the FHFA’s Monthly Interest Rate Survey (MIRS) of purchase-money mortgages, these rates reflect loans closed from October 26 to October 31. As interest rates are typically determined 30 to 45 days before the loan is closed, it is important to note that the FHFA’s reported rates depict market conditions in mid to late September.

Down 13 basis points from the previous month, the contract rate on the composite of all mortgage loans, including both fixed and adjustable-rate loans, fell to 5.02 percent in October. Reflecting amortization of initial fees and charges, the effective interest rate dropped 13 basis points to 5.11 percent in October. According to the report, initial fees and charges were 0.63 percent of the loan balance in October, a 0.01 increase from September. Falling 3 percent from September, 42 percent of the purchase-money mortgage loans originated in October were “no-point” mortgages.

Compared to September, the average term in October was up 0.1 years to 28.1 years, and the average loan-to-price ratio was down 0.5 percent to 74.0 percent during the same period. Additionally the FHFA reported that the average loan amount fell to $211,200 in October, a $1,200 decline from September.

While October interest rates were low, November rates have been even lower, according to a report released Tuesday by Zillow Mortgage Marketplace. As indicated by the reported, the weekly average rate borrowers were quoted on Zillow for 30-year fixed-rate mortgages decreased six basis points last week to 4.69 percent, and rates for 15-year fixed mortgages dropped two basis points to 4.23 percent. On Monday (November 30) the average rate for a 30-year fixed mortgage on Zillow decreased an additional 0.05 percent to 4.64 percent.

Zillow reported a 4.4 percent decline in the volume of mortgage requests last week. Out of these, 49 percent were for refinance loans, 49 percent were for purchase loans, and 2 percent were for home equity loans. These results are only slightly different from the prior week’s 47 percent of requests for refinance loans, 51 percent for purchase loans, and 2 percent for home equity loans.

According to the Zillow report, interest rates for 30-year fixed mortgages varied by state. Mortgage rates in Minnesota, Arizona, Michigan, and Georgia saw the most significant decrease in rates, with the lowest rates in Texas and Minnesota. New York and Tennessee saw the highest mortgage rates in the country, the report said.

In the most recent news regarding mortgage interest rates, Freddie Mac released the results of its Primary Mortgage Market Survey (PMMS) today. For the week ending November 25, 2009, the 30-year fixed-rate mortgage averaged 4.78 percent with an average 0.70 point, down from the prior week’s average of 4.83 percent and an average of 5.97 percent during the same period last year. According to the survey, the 30-year fixed-rate mortgage has not been this low since the week ending April 30, 2009, when it also averaged 4.78 percent.