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Old 11-08-2007, 10:08 AM
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Post Concerns about consumer spending, credit quality impact investors

Long-term mortgage rates posted mixed movement this week in response to recent good and bad economic reports, Freddie Mac and said today.

According to Freddie Mac Vice President and Chief Economist Frank Nothaft, "Reports of weaker consumer spending in September and a decline in manufacturing activity in October kept mortgage rates at bay this week. Rates for long-term mortgages were little changed, while rates for ARMs fell following the Federal Reserve's interest-rate cut."

In Freddie Mac's survey, the average 30-year fixed-rate mortgage dropped to 6.24 percent from last week's 6.26 percent, and is now at its lowest level since May 17 when it averaged 6.21 percent. The 15-year fixed-rate mortgage dipped to an average 5.9 percent from last week's 5.91 percent, which is now the lowest that rate has been since May 10 when it averaged 5.87 percent.

Points, or fees lenders charge for loan processing expressed as a percent of the loan, averaged 0.4 on the 30- and 0.5 on the 15-year loans.

Average rates on adjustable-rate mortgages (ARMs) also hit six-month lows, Freddie Mac reported, with the five-year Treasury-indexed hybrid ARM sinking from 5.98 percent to 5.89 percent and the one-year ARM dipping to 5.5 percent from 5.57 percent. Points on the five-year and one-year loans averaged 0.5 and 0.6, respectively.

In's survey, mortgage rates moved slightly higher on better-than-expected economic news and continued concerns about credit quality. While the October employment report showed 166,000 new jobs, it was skittishness about the prevalence of bad loans that was the primary force driving mortgage rates higher. The uncertainty about the credit quality of loans made to subprime borrowers and borrowers with limited documentation is giving investors reason to command higher returns, even on loans made to creditworthy home buyers and refinancers. As a result, mortgage rates moved higher as benchmark Treasury yields declined, adding additional risk premium into mortgage-backed bonds.

According to, the average conforming 30-year fixed mortgage rate rose to 6.34 percent this week, with discount and origination points averaging 0.38. The average 15-year fixed-rate mortgage popular for refinancing increased to 6.04 percent, and the average jumbo 30-year fixed rate inched higher to 7.05 percent. Adjustable mortgage rates were mixed, reported, with the average one-year ARM rising to 6.07 percent and the average 5/1 ARM sinking to 6.18 percent.

The following is a sampling of's average 30-year-mortgage interest rates this week in some U.S. metropolitan areas:

New York - 6.41 percent with 0.17 point

Los Angeles - 6.37 percent with 0.66 point

Chicago - 6.41 percent with 0.2 point

San Francisco - 6.27 percent with 0.73 point

Philadelphia - 6.38 percent with 0.14 point

Detroit - 6.42 percent with no points

Boston - 6.41 percent with 0.04 point

Houston - 6.17 percent with 0.82 point

Dallas - 6.28 percent with 0.47 point

Washington, D.C. - 6.23 percent with 0.55 point

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