Rates Fall Back on Lower Inflation

By DIANA GOLOBAY June 18, 2009 10:39 AM CST

Average mortgage rates across the board fell in the week ending June 18 after spiking briefly the week before, according to a survey released today by mortgage giant Freddie Mac (FRE: 0.7353 +2.12%).

“Reports of benign inflation figures reversed the upward trend of mortgage rates this week,” however, “it’s still too early to tell whether the decline in housing market activity has hit bottom yet,” says Frank Nothaft, Freddie’s chief economist, in a media statement today.

Thirty-year fixed mortgages (FRMs) averaged 5.38% rates with an average 0.7 point, down from 5.59% last week. The average rate for a 15-year FRM came in at 4.89% with an average 0.7 point, from 5.06% last week. Five-year adjustable-rate mortgages (ARMs) averaged 4.97% with an average 0.6 point, from 5.17% last week, while one-year ARMs averaged 4.95% with an average 0.6 point, from 5.19% the week before.

A separate survey conducted by Bankrate.com confirmed a drop in rates, with 30-year FRMs averaging 5.76% with an average 0.43 point, down from 5.96% the previous week. Bankrate’s data also found 15-year FRMs down to 5.19% from 5.37%.

“The concerns about eventual inflation that drove bond yields and mortgage rates higher have been tempered by the reality of continued weakness in the economy,” Bankrate said in a media statement.

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