Bankrate: Mortgage Rates Dip After Fed President's Speech

New York, NY, USA 14 September 2006/PRNewswire-FirstCall/ -- Fixed mortgage rates dipped again, falling for the ninth time in the past 11 weeks. The average 30-year fixed mortgage rate is now 6.44 percent. According to Bankrate.com's weekly national survey of large lenders, the 30-year fixed rate mortgages had an average of 0.30 discount and origination points.

The average 15-year fixed rate mortgage popular for refinancing fell again to 6.12 percent. On larger loans, the average jumbo 30-year fixed rate headed lower to 6.69 percent. Adjustable rate mortgages dropped this week. The average 5/1 adjustable rate mortgage decreased to 6.19 percent, and the average one-year ARM tumbled 0.10 percent to 5.89 percent.

Encouraging words from one of the Federal Reserve's rate-setters sent long-term mortgage rates slightly down this week. Janet Yellen, president of the Federal Reserve Bank of San Francisco, spoke Tuesday to the Emeryville, Calif., Chamber of Commerce, and said that she believes "it is critical that inflation trend in a downward direction over the medium term. Indeed, my expectation is that this is the most likely outcome."

Mortgage rates are influenced by what the bond market thinks will happen to prices. If bond traders believe inflation will rise, mortgage rates rise, too. If bond traders believe inflation will level off or fall, the same thing often happens to mortgage rates. Yellen sits on the Fed's rate-setting Open Market Committee, which meets next week. Her opinion matters a lot, and bond yields fluttered downward in the hours after her speech. Long-term mortgage rates followed.

Fixed mortgage rates are nearly one-half percentage point lower than when the Fed last hiked rates at the end of June. At the time, the average 30-year fixed mortgage rate was 6.93 percent, meaning that the monthly payment on a loan of $165,000 was $1,090. With the average 30-year fixed rate now 6.44 percent, the same loan originated today would carry a monthly payment of $1,036.41. Fixed mortgage rates remain an attractive refinancing alternative for adjustable rate borrowers facing sharp payment adjustments.

SURVEY RESULTS

30-year fixed: 6.44% -- down from 6.45% last week (avg. points: 0.30)
15-year fixed: 6.12% -- down from 6.14% last week (avg. points: 0.29)
5/1 ARM: 6.19% -- down from 6.24% last week (avg. points: 0.31)

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. Most panelists still see rates leveling off, but an increasing minority sees the downward trend continuing to decline. A quarter of the experts say rates will fall further, with 63 percent predicting rates to remain unchanged. The remaining 12 percent forecast that rates will rise from current levels in the next 30 to 45 days.

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 4,800 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.