Mortgage Rates Fall, Boost Sales

Interest rates on home mortgages dropped this week, with the 30-year fixed-rate mortgage averaging 5.08%, according to Freddie Mac's weekly survey of conforming mortgages.

The 30-year fixed-rate mortgage averaged 5.14% last week and 6.35% a year ago. Fifteen-year fixed-rate mortgages also dropped, averaging 4.54% for the week ending Sept. 3, down from 4.58% last week. The mortgage averaged 5.9% a year ago.

Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 4.59%, down from 4.67% last week and 5.97% a year ago. And one-year Treasury-indexed ARMs averaged 4.62%, down from 4.69% last week and from 5.15% a year ago.

"Bond yields pushed mortgage rates slightly lower this week," said Frank Nothaft, Freddie Mac vice president and chief economist, in a statement. "Low mortgage rates are helping to keep housing very affordable."

Seven of the top eight most affordable months, as measured by the National Association of Realtors' Housing Affordability Index, have taken place during 2009, he said. The NAR's index dates back to 1971.

"As a result, pending sales of existing homes rose for the sixth month in a row in July, a trend unseen since the NAR began reporting data in 2001. Moreover, July's sales were the strongest since June 2007," Mr. Nothaft said.

The NAR's pending-home-sales index rose 3.2% for the month and came in 12% higher than July 2008, the Washington-based trade group reported on Monday.

In a separate release Wednesday, the Mortgage Bankers Association reported that mortgage applications were down a seasonally adjusted 2.2% for the week of Aug. 28 compared with the prior week.