Good Employment Report Lifts Mortgage Rates and Eases Fears About National Economy
McLEAN, VA -- Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey (PMMS) in which the 30-year fixed-rate mortgage (FRM) averaged 6.21 percent with an average 0.4 point for the week ending January 11, 2007, up from last week when it averaged 6.18 percent. Last year at this time, the 30-year FRM averaged 6.15 percent. The 15-year FRM this week averaged 5.96 percent with an average 0.4 point, up from last week when it averaged 5.94 percent. A year ago, the 15-year FRM averaged 5.71 percent. Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 6.03 percent this week, with an average 0.5 point, up slightly from last week when it averaged 6.02 percent. A year ago, the five-year ARM averaged 5.76 percent. One-year Treasury-indexed ARMs averaged 5.44 percent this week with an average 0.5 point, up from last week when it averaged 5.42 percent. At this time last year, the one-year ARM averaged 5.15 percent. "The December employment report came in higher than expected, providing a lift to interest rates," said Frank Nothaft, Freddie Mac vice president and chief economist. "The gain in employment in December exceeded the consensus forecast, and helped ease fears about the state of the economy. But stronger employment and higher wages put upward pressure on inflation, which, in turn, translates into higher interest rates." "Looking forward, we expect rates on 30-year fixed-rate mortgages to remain below 6.5 percent in the coming year and for adjustable-rate mortgage rates to be less attractive to borrowers in 2007 than they have been in recent years. We now expect the ARM share of home purchase mortgages in 2007 to fall below 20 percent for the first time since 2003." |
