Low Mortgage Rates stabilize the Housing Market

McLean, VA - August 27, 2009 - (RealEstateRama) — Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 5.14 percent with an average 0.7 point for the week ending August 27, 2009, up from last week when it averaged 5.12 percent. Last year at this time, the 30-year FRM averaged 6.40 percent.

The 15-year FRM this week averaged 4.58 percent with an average 0.7 point, up from last week when it averaged 4.56 percent. A year ago at this time, the 15-year FRM averaged 5.93 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 4.67 percent this week, with an average 0.6 point, down from last week when it averaged 4.57 percent. A year ago, the 5-year ARM averaged 6.03 percent.

One-year Treasury-indexed ARMs averaged 4.69 percent this week with an average 0.6 point, unchanged from last week when it averaged 4.69 percent. At this time last year, the 1-year ARM averaged 5.33 percent.

(Average commitment rates should be reported along with average fees and points to reflect the total cost of obtaining the mortgage.)

“Long-term mortgage rates were barely changed this week, remaining historically low, which is helping to sustain a high level of affordability in the home-purchase market,” said Frank Nothaft, Freddie Mac vice president and chief economist.” Low rates contributed to existing home sales rising for the fourth consecutive month to an annual pace of 5.24 million in July, the most since August 2007, according to the National Association of Realtors®.

“Similarly, new home sales rose for the fourth month in a row to 0.4 million, the strongest pace since September 2008, the Commerce Department reported. The sales gain helped to reduce the number of new unsold houses on the market to the lowest amount since March 1993. In addition, house prices in June rose nationally for the second consecutive month, according to the Federal Housing Finance Agency’s purchase-only house price index.”

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation’s residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than five million renters.

Freddie Mac’s Primary Mortgage Market Survey (PMMS) is for informational purposes only and Freddie Mac is not responsible for business decisions made based on the reported results of the PMMS. Freddie Mac may change the methodology used to conduct the PMMS survey at any time and without notice.

DEFINITIONS

Commitment Rate is the interest rate a lender would charge to lend mortgage money to a qualified borrower exclusive of the fees and points required by the lender. This commitment rate applies only to conventional financing on conforming mortgages with loan-to-value rates of 80 percent or less.

ARM Index - is the One-year Treasury

Loan to Value Ratio (LTV) is the ratio of the loan amount of a mortgage loan to the lower of the appraisal value or purchase price of the property securing the loan.

Origination Fees and Discount Points are the total charged by the lender at settlement. One point equals one percent of the loan amount.

Margin is a fixed amount added to the underlying index to establish the fully indexed rate for an ARM.

Weighted Averages for the Primary Mortgage Market Survey have been adjusted as of October 16, 2008. The new weights use the dollar volume of conventional mortgage originations within the 1-unit Freddie Mac loan limit as reported under Home Mortgage Disclosure Act (HMDA) for 2007. The weights are listed in the table below.

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