Lower Mortgage Rates Lead to $2.5B in Refinance Savings

""Freddie Mac"":http://www.freddiemac.com released the results of its ""Primary Mortgage Market Survey"":http://www.freddiemac.com/pmms/release.html (PMMS) on Thursday, which showed that rates for fixed-rate mortgages this week lingered at their record lows and those for adjustable-rate mortgages also eased. The 30-year fixed-rate mortgage (FRM) tied its lowest level, reached earlier this month, and has fallen nearly two full percentage points from its peak recorded last October.
Frank Nothaft, Freddie Mac's VP and chief economist, said, ""In aggregate, borrowers who refinanced during the first quarter reduced their mortgage payments by about $2.5 billion over the coming year."" Nothaft explained that the savings are due to the record-low rates for 30-year FRMs, the most popular loan among homeowners seeking to refinance. ""For a $200,000 loan, this means a monthly savings of almost $212 in mortgage payments, or over $2,500 per year"" for individual homeowners, Nothaft said.
For the week ending April 30, 2009, Freddie Mac reported that the 30-year FRM averaged 4.78 percent (0.7 point), down from last week when it came in at 4.80 percent. Last year at this time, the 30-year FRM was 6.06 percent. The 30-year FRM now equals the record low that was set the week of April 7, 2009. It has never been recorded lower in Freddie Mac’s survey, which goes back to 1970.
The 15-year FRM this week averaged 4.48 percent (0.7 point), unchanged for the third week in a row. A year ago at this time, the 15-year FRM was 5.59 percent. This week's rate is tied with the last two weeks for the lowest the 15-year FRM has been since Freddie Mac began tracking it in August 1991.
According to Freddie Mac's survey, 5-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 4.80 percent this week (0.6 point), a drop from last week when they averaged 4.85 percent. A year ago, the 5-year ARM averaged 5.73 percent. For the 5-year ARM also, this week's rate is the lowest it has been since Freddie Mac began tracking it in January 2005.
One-year Treasury-indexed ARMs averaged 4.77 percent this week (0.7 point), down from last week when they were reported at 4.82 percent. At this time last year, the 1-year ARM averaged 5.29 percent.
Nothaft commented that the housing market may be edging towards a bottom. ""Existing home sales stayed near its four-month average in March, while new home sales were stronger than the market consensus,"" he said. ""More importantly, the inventory of unsold new homes fell to the lowest number since January 2002. And, the S&P/Case-Shiller 20-city composite index did not show a record year-over-year decline in February for the first time since December 2006."" Nothaft also noted that housing affordability hit record highs in the first quarter of this year, according to figures from the National Association of Realtors, which date back to January 1971.