By Amy Hoak, MarketWatch
RISMEDIA, July 10, 2007—(MarketWatch)—Long-term mortgage rates declined for the third consecutive week, in part reflecting a moderation in core inflation, Freddie Mac’s chief economist said on Thursday.
The 30-year fixed-rate mortgage averaged 6.63% for the week ending July 3, down from its 6.67% average last week, according to Freddie Mac’s weekly survey. The mortgage averaged 6.79% a year ago.
“In the statement accompanying their decision to leave the target federal funds rate unchanged, the Fed noted that core inflation had declined recently, though a ‘sustained’ moderation is still to be seen, and signaled that inflation risk continues to figure prominently in their policy decisions,” Frank Nothaft, Freddie Mac vice president and chief economist said in a news release.
“Helping to ease some inflation concerns, May’s personal consumption expenditures report found that the core price measure had increased 1.9% for the year ending in May, within the 1% to 2% range with which the Fed is comfortable, and the lowest year-over-year rise in more than 3 years,” he said.
The 15-year fixed-rate mortgage averaged 6.30% for the week, down from last week’s 6.34% average. The mortgage averaged 6.44% a year ago.
Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 6.29%, down slightly from last week’s 6.30% average. The hybrid averaged 6.39% a year ago.
One-year Treasury-indexed ARMs moved in the other direction, averaging 5.71% for the week, up from last week’s 5.65% average. The ARM averaged 5.82% a year ago.
To obtain the rates, both fixed-rate mortgages and both ARMs required payment of an average 0.4 point. A point is 1% of the mortgage amount, charged as prepaid interest.
According to another survey released on Thursday by the Mortgage Bankers Association, mortgage loan application volume was virtually unchanged from the previous week, increasing a seasonally adjusted 0.1%. Volume was up 9.7% compared with a year ago.
The volume of loans for refinance decreased 2.6% over the week; the volume for purchase increased a seasonally adjusted 2.0%, according to the MBA.
The MBA survey found that the average interest rate for the 30-year fixed-rate mortgage was 6.50% for the week ending June 29, down from its 6.60% average the week before. The 15-year fixed-rate mortgage averaged 6.20%, down from 6.24%. The 1-year ARM averaged 5.49%, down from 5.51% the previous week.
Amy Hoak is a MarketWatch reporter based in Chicago.
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