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Bulletin: 5-Year ARM Mortgage Hits Record 2.96 Percent

The five-year ARM has hit an all-time record. Having fallen for the eighth consecutive week it now stands at 2.96 percent, according to Freddie Mac.

The idea that ARM rates across the country would fall below 3 percent is stunning, proof that the country is awash in capital that essentially has nowhere to go. While it has been possible to see such low start rates in the past, they have often been associated with bait-and=switch financing that features very short start periods — say one to six months — and then vastly higher-monthly costs. Today’s rate announcement from Freddie Mac simply refers to ARM rates in general that use a Treasury index. Presumably, start rates are even lower.

  • 30-year fixed-rate mortgage (FRM) averaged 4.22 percent with an average 0.7 point for the week ending September 1, 2011, matching last week when it also averaged 4.22 percent. Last year at this time, the 30-year FRM averaged 4.32 percent.
  • 15-year FRM this week averaged 3.39 percent with an average 0.6 point, down from last week when it averaged 3.44 percent. A year ago at this time, the 15-year FRM averaged 3.83 percent.
  • 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.96 percent this week, with an average 0.6 point, down from last week when it averaged 3.07 percent. A year ago, the 5-year ARM averaged 3.54 percent.

According to Frank Nothaft, Freddie Mac’s vice president and chief economist,”Weaker economic data reports eased upward pressure on mortgage rates this week and kept them at or near all-time record lows. The economy grew at a slower rate of 1 percent in the second quarter than was originally reported due to a smaller increase in inventories and fewer exports. In addition, consumer confidence in August fell to the lowest reading since April 2009, according to The Conference Board.

“Recently released data on the housing market also showed less strength as well. The S&P/Case-Shiller® National Index fell 5.9 percent between the second quarters of 2010 and 2011, representing the largest yearly decrease since the third quarter of 2009. Moreover, July’s pending sales of existing homes fell at a monthly rate of 1.3 percent, the first decline since April 2011.”

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