Tamer Inflation figures drives Mortgages Lower

McLean, VA – Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 5.38 percent with an average 0.7 point for the week ending June 18, 2009, down from last week when it averaged 5.59 percent. Last year at this time, the 30-year FRM averaged 6.42 percent.

The 15-year FRM this week averaged 4.89 percent with an average 0.7 point, down from last week when it averaged 5.06 percent. A year ago at this time, the 15-year FRM averaged 6.02 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 4.97 percent this week, with an average 0.6 point, down from last week when it averaged 5.17 percent. A year ago, the 5-year ARM averaged 5.89 percent.

One-year Treasury-indexed ARMs averaged 4.95 percent this week with an average 0.6 point, down from last week when it averaged 5.04 percent. At this time last year, the 1-year ARM averaged 5.19 percent.

(Average commitment rates should be reported along with average fees and points to reflect the total cost of obtaining the mortgage.)

“Reports of benign inflation figures reversed the upward trend of mortgage rates this week,” said Frank Nothaft, Freddie Mac vice president and chief economist. “The producer price index rose only 0.2 percent in May, roughly a third less than the consensus forecast and the consumer price index increased by just 0.1 percent. Moreover, the 12-month drop of 5.0 percent in producer prices was the largest since 1949 and the 1.3 percent yearly decrease in consumer prices the biggest since 1950.

“It’s still too early to tell whether the decline in housing market activity has hit bottom yet. The prior three-week run up in rates for 30-year fixed mortgages, which amounted to over 0.75 percentage points, is starting to slow homebuyer demand, at least temporarily. Mortgage applications for home purchases fell for the first time in four weeks, slipping 3.5 percent for the week ending June 12th, according to the Mortgage Bankers Association. In addition, although new construction of one-family homes rose for the third consecutive month in May by 7.5 percent, and the National Association of Home Builders reported that homebuilder assessments of market conditions in June and for the remainder of this year had weakened."

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than five million renters.

Mortgage Applications Increase

WASHINGTON, D.C. (May 6, 2009) — The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending May 1, 2009. The Market Composite Index, a measure of mortgage loan application volume, was 979.7, an increase of 2.0 percent on a seasonally adjusted basis from 960.6 one week earlier. On an unadjusted basis, the Index increased 2.4 percent compared with the previous week and 43.7 percent compared with the same week one year earlier.

The Refinance Index increased 1.2 percent to 5169.3 from 5108.2 the previous week and the seasonally adjusted Purchase Index increased 5.0 percent to 264.3 from 251.6 one week earlier. The Conventional Purchase Index increased 5.5 percent while the Government Purchase Index (largely FHA) increased 4.4 percent.

The four week moving average for the seasonally adjusted Market Index is down 6.0 percent. The four week moving average is down 3.1 percent for the seasonally adjusted Purchase Index, while this average is down 6.7 percent for the Refinance Index.

The refinance share of mortgage activity decreased to 74.4 percent of total applications from 75.3 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 2.1 percent of total applications from the previous week.

The average contract interest rate for 30-year fixed-rate mortgages increased to 4.79 percent from 4.62 percent, with points increasing to 1.17 from 1.14 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.

The average contract interest rate for 15-year fixed-rate mortgages increased to 4.57 percent from 4.45 percent, with points increasing to 1.07 from 0.96 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for one-year ARMs increased to 6.36 percent from 6.23 percent, with points remaining unchanged at 0.12 (including the origination fee) for 80 percent LTV loans.

**SPECIAL NOTES**

The survey covers approximately 50 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100.

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The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 280,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation's residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 2,400 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA's Web site: www.mortgagebankers.org.

Obama Encourages Refinancing

President Obama encouraged American Households to avail of refinancing opportunities through the administration’s "Making Home Affordable" initiative.The program is designed to allow homeowners that are underwater to refinance loans owned by Fannie Mae or Freddie Mac and take advantage of lower rates brought about by the Obama administration via the actions of the Treasury Department under the guidance of Secretary Geithner. Homeowners must be current on their mortgage and can refinance even if thier loan-to-value ratio is at 105% due to declining property values.

"We are at a time where people can really take advantage of this, and what we want to do is to send a message that if you are having problems with your mortgage – and even if you're not, and you just want to save some money – you can go to makinghomeaffordable.gov." Bank of America announced that it has begun refinancing such loans.

In addition to the stability provided by the Government program, there are signs that buyers are entering the spring market to take advantage of lower interest rates. Single-family permits were also up 11 percent in February with new and existing home sales posting solid gains. Inventory levels across the nation are slowly being reduced and key areas that showed the first signs of the housing slowdown are bouncing back.