Mortgage & Housing Market

The Fixed and Adjustable rate mortgages diverged in their path this week. However, the general upward direction of rates as seen in last few months has certainly started taking its toll on the housing market. In the 1st quarter of 2006, the housing industry accounted for only 7% of real Gross Domestic Product (GDP). In the 4th quarter of 2005 it was about 19%.

According to Freddie Mac's weekly survey, the 30-year fixed-rate mortgage averaged 6.62% in the week that ended today. This is slightly higher than its 6.60% average last week. At this time last year, the loan averaged 5.65%. The 30-year mortgage has not been higher since the week ending June 20, 2002, when it averaged 6.63%. The 15-year fixed rate averaged at 6.23% this week, up from last week's 6.2%. At this time last year this rate was 5.21%.

However, the rate for 5-year Treasury-indexed hybrid adjustable-rate mortgages (ARM) moved down to 6.21% from 6.23% last week. This rate averaged 5.07% a year ago. The 1-year Treasury-indexed ARMs also moved down slightly this week to 5.61%, from 5.62%. At this time in 2005, the ARM averaged 4.21%.