Mortgage Rate Down Again

The Federal Reserve held interest rates steady for a second straight meeting. On Thursday, after an index of manufacturing in the Philadelphia region showed a negative result for the first time since April 2003, the Long-term Treasury prices rallied, driving the yield on the 10-year note to a fresh six-month low. In intraday trading, the 10-year yield fell as low as 4.648% -- down from its Wednesday closing level of 4.728%.

...And solid evidences for slowing housing market and signs that inflation is leveling off helped to lower mortgage rates again this week. The benchmark 30-year mortgage now has declined in eight of the last nine weeks. People are expecting the economy to expand at a slower rate during the fourth quarter, keeping inflation in check and helping mortgage rates stay at this comfortable level.

According to Freddie Mac's weekly survey, the 30-year fixed-rate mortgage averaged 6.40% in the week that ended today -- down from its 6.43% average last week. At this time last year, the loan averaged 5.80%. The 15-year fixed rate averaged at 6.06% this week, again a slide from last week's 6.11%. At this time last year this rate was 5.37%.

Rate for 5-year Treasury-indexed hybrid adjustable-rate mortgages (ARM) averaged at 6.08% decreasing slightly from last week's 6.10%. This rate averaged 5.26% a year ago. The 1-year Treasury-indexed ARMs have an average rate of 5.54%, down from last week's rate of 5.60%. At this time in 2005, the 1-year ARM averaged only 4.48%.