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Bankrate: Mortgage Rates Fall Sharply on Housing and Economic Worries

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RISMEDIA, Oct. 26, 2007-Mortgage rates dropped notably this week, with the average conforming 30-year fixed mortgage rate now 6.31%. According to Bankrate.com’s weekly national survey of large lenders, the average 30-year fixed mortgage has an average of 0.34 discount and origination points.

The average 15-year fixed rate mortgage, popular for refinancing, plunged from 6.17% to 6.00%. The average jumbo 30-year fixed rate retreated to 7.04%. Adjustable mortgage rates declined as well, with the average one-year ARM down to 6.09%, and the average 5/1 ARM falling to 6.12%.

More jitters about the housing market and its effect on the economy drove mortgage rates lower. Bank earnings brought a renewed focus to mortgage delinquencies and concerns about the credit markets helped drive investors into the safe haven of long-term government bonds. Fixed mortgage rates are closely related to the yields on Treasury securities. The average 30-year fixed mortgage rate dropped from 6.49% to 6.31% in the past week. Also, the spread between jumbo and conforming mortgage rates continues to improve, now at its narrowest since early August. The average jumbo 30-year fixed mortgage rate is 7.04%, and that is the lowest since July 25.

Fixed mortgage rates remain the most attractive option for borrowers. Just three months ago, the average 30-year fixed mortgage rate was 6.75%, meaning that a $200,000 loan would have carried a monthly payment of $1,297.20. Now that the average conforming 30-year fixed rate is 6.31%, the same $200,000 loan carries a monthly payment of $1,239.25.

SURVEY RESULTS

30-year fixed: 6.31% — down from 6.49% last week (avg. points: 0.34)
15-year fixed: 6.00% — down from 6.17% last week (avg. points: 0.35)
5/1 ARM: 6.12% — down from 6.26% last week (avg. points: 0.31)

Bankrate’s national weekly mortgage survey is conducted each Wednesday from data provided by the top 10 banks and thrifts in the top 10 markets.

For more information, visit http://www.bankrate.com/mortgagerates.

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