Mortgage rates fell across the board this week, driven down by the lower-than-expected increase in the Labor Department's Consumer Price Index yesterday, Freddie Mac reported.
Freddie's Primary Mortgage Market Survey reported that 30-year fixed-rate mortgage (FRM) averaged 5.38% with an average 0.7 point for the week ending June 18, 2009, down from 5.59% last week and well below 6.42% at the same time last year.
Rates on 15-year loans averaged 4.89% with an average 0.7 point, down from 5.06% last week and 6.02% during the comparable week last year. ARMs averaged 4.97% this week, with an average 0.6 point, down from 5.17% last week and 5,89% last year. One-year Treasury-indexed ARMs averaged 4.95%, with an average 0.6 point, down from 5.04% and 5.19%, respectively.
"Reports of benign inflation figures reversed the upward trend of mortgage rates this week,²"said Frank Nothaft, Freddie Mac vp and chief economist. Among those figures: the producer price index rose 0.2% in May against expectations of roughly a third more than that; the CPI was up just 0.1%; the 5% drop in producer prices was the biggest since 1949; and the 1.3% year-over-year decrease in consumer prices was the largest drop since 1950.
"It's still too early to tell whether the decline in housing market activity has hit bottom yet," Nothaft added. He said the increase in average mortgage rates of more than three-quarters of a percentage point "is starting to slow homebuyer demand" and noted that mortgage applications last week fell 3.5%, the first drop in four weeks.