Bankrate: Mortgage Rates Decline for the Second Consecutive Week

New York, New York, USA, 13 July 2006 -- /PRNewswire/ -- Fixed mortgage rates continued to drop this week. The average 30-year fixed rate mortgage dipped to 6.87% from 6.91%. According to Bankrate.com's weekly national survey of large lenders, the 30-year fixed rate mortgages had an average of 0.31 discount and origination points.

The average 15-year fixed rate mortgage popular for refinancing slid to 6.47%. On larger loans, the average jumbo 30-year fixed rate decreased slightly, but remains above the 7% threshold, at 7.03%. Adjustable rate mortgages were mixed. The average 5/1 adjustable rate mortgage fell to 6.52%, and the average one-year ARM increased to 6.12 percent.

Two things happened to bring mortgage rates down this week. One was the reaction to Tuesday's train bombings in Mumbai. At times of international tension, investors buy U.S. Treasury notes, and such a buying spree depresses bond yields. Mortgage rates often follow. By Tuesday afternoon, bond yields had risen almost, but not quite, to their levels before the train bombings.

The bigger factor in this week's rate drop comes from Wall Street's reaction to the June employment report, released Friday by the Labor Department. Most investors expected the report to say that the economy had grown by 160,000 to 175,000 jobs in June. As it turned out, the report said non-farm payrolls grew by 121,000. The lower-than-expected estimate caused investors to reason that with a slower job market, corporate payroll stays down, inflation is more likely to be restrained, and may influence the Federal Reserve to stop raising short-term interest rates. This could take away some of the upward pressure on long-term rates, including for mortgages.

Fixed mortgage rates are considerably higher than one year ago, the average 30-year fixed mortgage rate was 6.11%, meaning that the monthly payment on a loan of USD 165,000 was USD 1000.96. With the average 30-year fixed rate now 6.87%, the same loan originated today would carry a payment of USD 1083.38. Despite recent increases, fixed mortgage rates remain an attractive refinancing alternative for adjustable rate borrowers facing sharp payment adjustments.

SURVEY RESULTS

30-year fixed: 6.87% -- down from 6.91% last week (avg. points: 0.31)
15-year fixed: 6.47% -- down from 6.54% last week (avg. points: 0.34)
5/1 ARM: 6.52% -- down from 6.55% last week (avg. points: 0.30)

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, respondents overwhelmingly expect mortgage rates to keep rising, with 84 percent in that camp. The remaining 16 percent forecast that rates will remain unchanged in the next 30 to 45 days. Interestingly, no one predicts mortgage rates to fall during that time.

For the full mortgage Rate Trend Index, go to: http://www.bankrate.com/RTI

About Bankrate, Inc.

Bankrate, Inc. (NASDAQ:RATE) owns and operates Bankrate.com, a leading Internet consumer banking marketplace. Bankrate.com is a destination site of personal finance channels, including banking, investing, taxes, debt management and college finance. It is the leading aggregator of more than 300 financial products, including mortgages, credit cards, new and used auto loans, money market accounts and CDs, checking and ATM fees, home equity loans and online banking fees. Bankrate.com reviews more than 4800 financial institutions in 575 markets in 50 states. In 2005, Bankrate.com had over 46 million unique visitors. Bankrate.com provides financial applications and information to a network of more than 75 partners, including Yahoo! (NASDAQ:YHOO), America Online (NYSE:TWX), The Wall Street Journal (NYSE:DJ) and The New York Times (NYSE:NYT). Bankrate.com's information is also distributed through more than 400 national and state publications. In addition to Bankrate.com, Bankrate, Inc. also owns and operates FastFind, an internet lead aggregator and MMIS/Interest.com, which publishes mortgage guides and financial rates and information.