Mortgage Rates Drop; 5/1 ARM at 8-Year Low

Freddie Mac released its weekly update on national mortgage rates this morning, showing a continued slide in rates nearly across the board. Rates remain near record lows.

Thirty-year fixed-rate mortgages (FRM) dropped another two basis points on top of the 11-basis-point slide of the previous week, and now stand at 3.41%. (Last year at this time, the average rate was 3.9%.) Shorter-term 15-year FRMs shed a single basis point, falling to 2.64%, which is where they started the year. (Last year at this time, the average rate was 3.13%.)

Variable-rate mortgages, in contrast, took different paths. One-year ARMs gained back the single basis point they lost last week, and are now back at 2.63%. 5/1 ARMs, however, fell two basis points to 2.60%. Freddie Mac says that's the lowest that rate has been since it began tracking in 2005. 

Commenting on the numbers, Freddie Mac Vice President and Chief Economist Frank Nothaft linked continuing low mortgage rates to weak consumer spending in general, and continued negativism among consumers. "Retail sales contracted for the second time in three months, falling 0.4 percent in March," he is quoted as saying. "In addition, the University of Michigan reported their Consumer Sentiment Index dropped 6.3 points in April to settle at 72.3, its lowest level since July. The April reading snapped a streak of three consecutive gains."

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