Mortgage Rate Drops

After reaching an almost steady state last week, the mortgage rate finally dropped this week after 4 consecutive weeks of increase. Two factors seem to be playing behind this fall: (i) June's unemployment figures indicated a slowing economy, (ii) Some people are anticipating that the Federal Reserve has only one more rate hike left possibly in its August meeting.

According to Freddie Mac's weekly survey, the 30-year fixed-rate mortgage averaged 6.74% in the week that ended today -- down from its 6.79% average last week. At this time last year, the loan averaged 5.66%. The 15-year fixed rate averaged at 6.37% this week, again a drop from last week's 6.44%. At this time last year this rate was 5.25%.

Rate for 5-year Treasury-indexed hybrid adjustable-rate mortgages (ARM) averaged at 6.33% sliding from last week's 6.39%. This rate averaged 5.15% a year ago. The 1-year Treasury-indexed ARMs also moved down this week to 5.75% from last week's rate of 5.83%. At this time in 2005, the 1-year ARM averaged 4.39%.