Freddie Mac Weekly Update:Mortgage Rates Ease Back a Little

30-year fixed-rate mortgage: Averaged 4.81 percent with an average 0.7 point for the week ending December 23, 2010, down from last week when it averaged 4.83 percent. Last year at this time, the 30-year FRM averaged 5.05 percent.

The 15-year fixed-rate mortgage: Averaged 4.15 percent with an average 0.7 point, down from last week when it averaged 4.17 percent. A year ago at this time, the 15-year FRM averaged 4.45 percent.

Five-year indexed hybrid adjustable-rate mortgages ARMs: Averaged 3.75 percent this week, with an average 0.6 point , down from last week when it averaged 3.77 percent. A year ago, the 5-year ARM averaged 4.40 percent.

One-year Treasury-indexed ARMs: A veraged 3.40 percent this week with an average 0.7 point, up from last week when it averaged 3.35 percent. At this time last year, the 1-year ARM averaged 4.38 percent.

Freddie Sayz
Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.
Mortgage rates were little changed this week following significant increases over the prior several weeks. Economic reports in December have suggested the economy began regaining momentum towards the end of the year, with consumer spending, industrial production and exports all posting solid gains. Treasury yields backed up as this stronger growth outlook caused an improvement in risk appetites and the likelihood of deflation to recede further.

Rates remain low, however, despite the recent rise, and are still well below where they began the year. Low mortgage rates are an important factor in housing affordability, which in October was the highest on record, according to the National Association of Realtors . These conditions are conducive to improving housing market conditions, and indeed, sales of existing single-family homes rose 6.7 percent in November to the strongest pace since June, according to the Realtors. In addition, the median sales price rose 1.2 percent over November 2009, which represented the first 12-month increase since August and largest gain since April. Finally, new construction on one-family homes in November rose to the strongest rate since April, based on figures released by the Census Bureau
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