Bankrate: Mortgage Rates Fall But Spreads at 22-Year High

    NEW YORK, Aug. 21 /EMWNews/ -- Mortgage rates retreated,

with the average conforming 30-year fixed mortgage rate falling to 6.66

percent. According to Bankrate.com's weekly national survey of large

lenders, the average 30-year fixed mortgage has an average of 0.4 discount

and origination points.



    



    The average 15-year fixed rate mortgage popular for refinancing dropped

to 6.18 percent, while the average jumbo 30-year fixed rate is now 7.62

percent. Adjustable mortgage rates were lower, with the average 1-year ARM

inching back to 6.24 percent and the average 5/1 ARM down to 6.26 percent.



    Even though mortgage rates declined this week, they remain nearly one

full percentage point higher than expected, given the yield on benchmark

Treasury yields. One year ago, when the credit crunch began, the average

30-year fixed mortgage rate was 6.58 percent. While that isn't much

different than the average of 6.66 percent today, the yield on benchmark

10-year Treasury notes was considerably higher 12 months ago, at 4.7

percent. Now, the T-note yield is 3.79 percent. The spread between mortgage

rates and Treasury yields, currently around 280 basis points, is 100 basis

points wider than it was one year ago and the widest since 1986. Why?

Investor skittishness about continued delinquencies and defaults has

resulted in higher risk premiums, with additional fees layered on by Fannie

Mae and Freddie Mac also increasing costs to borrowers.



    Although mortgage rates have been relatively calm in recent weeks, it

has been a wild ride for much of 2008. Three months ago, the average

30-year fixed mortgage rate was 6.02 percent, meaning that a $200,000 loan

would have carried a monthly payment of $1,201.67. But at today's rate of

6.66 percent, a $200,000 loan would mean a monthly payment of $1,285.25.






                                SURVEY RESULTS

     30-year fixed: 6.66% -- down from 6.74% last week (avg. points: 0.4)

    15-year fixed: 6.18% -- down from 6.26% last week (avg. points: 0.41)

       5/1 ARM: 6.26% -- down from 6.34% last week (avg. points: 0.42)



    Bankrate's national weekly mortgage survey is conducted each Wednesday

from data provided by the top 10 banks and thrifts in the top 10 markets.



    For a full analysis of this week's move in mortgage rates, go to

http://www.bankrate.com/mortgagerates



    The survey is complemented by Bankrate's weekly forward-looking Rate

Trend Index, in which a panel of mortgage experts predicts which way the

rates are headed over the next 30 to 45 days. This week, half of the

panelists expect mortgage rates to remain more or less unchanged. The other

half are split, with 29 percent predicting an increase in mortgage rates

and just 21 percent forecasting a decline in the next 30 to 45 days.



    For the full mortgage Rate Trend Index, go to

http://www.bankrate.com/RTI

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    Chris Spagnuolo

    Public Relations Manager

    [email protected]

    917-368-8671