Each week, Freddie Mac releases the results of their mortgage rate survey they conduct to sample mortgage rates offered by lenders and brokers around the country. Although some interpret this survey as the "rate that Freddie Mac sets" for mortgages, it is not; rates are not set by Freddie Mac directly, but rather by individual lenders and brokers based on mortgage bond pricing. Other factors can also affect these rates, such as the borrower's credit score, down payment, the property type and the total origination charge (points) that the lender is charging in order to obtain a certain rate.
In other words, the rates published in this survey are AVERAGES; they are not the exact rate that every single borrower can expect to receive. Some borrowers may be able to secure a lower rate if they are making a large down payment and have excellent credit, whereas borrowers with lower credit scores and who may be purchasing properties with higher risk factors may not be able to lock in rates this low.
The results of this survey are published by Freddie Mac every Thursday. They show average rates for four types of loan terms: 30 year fixed rate, 15 year fixed rate, 5/1 adjustable rate and One year adjustable rate mortgages.
The average mortgage rates reported by Freddie Mac as of today (April 22, 2010) were:
30 Year Fixed Rate Mortgage - 5.07%
15 Year Fixed Rate Mortgage - 4.39%
5/1 ARM - 4.03%
One Year ARM - 4.22%
And here's a chart that shows the trend of these four rate categories since the first of the year:
While rates have climbed some since the 2010 low set back in February, they are still near historic lows. The end of the Federal Reserve program to purchase mortgage-backed securities has not had as much impact on interest rates as some expected, but the market has not had much time to adjust to this new reality as of yet.
John Jones, Realtor(R)
JR Premier Properties
18170 Dallas Parkway, Suite 303
Dallas, TX 75287
Dallas, TX Real Estate and surrounding areas of Richardson, Plano, Addison, Frisco, Carrollton, Farmers Branch, Garland, Allen and Irving.
Dallas, TX neighborhoods and subdivisions of Lake Highlands, White Rock Lake, Lochwood, Eastwood, L Streets, M Streets, Hollywood Heights, Lakewood, Coronado and Gastonwood, Forest Hills, Preston Hollow.
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Why is a 5 year ARM less than a 1 year ARM? That doesn't quite seem right to me...
it seems wrong, but it's not. If the demand for five year ARMs is lower than one year, then the rates can be higher. I remember some ARM rates being higher than FIXED a couple of years ago when the market went haywire. Rates are set by supply and demand of the bonds, which explains how this can happen.