Bankrate: Fixed mortgage rates plunge

Fixed mortgage rates fell sharply in the past week, with the average conforming 30-year fixed mortgage rate now 5.98 percent. According to Bankrate.com's weekly national survey of large lenders, the average 30-year fixed mortgage has an average of 0.38 discount and origination points.

The average 15-year fixed rate mortgage popular for refinancing revisited a five week low of 5.46 percent, while the average jumbo 30-year fixed rate declined modestly to 7.43 percent. Adjustable mortgage rates were up sharply for the second week in a row, with the average 5/1 ARM jumping nearly one- quarter percentage point to 6.44 percent.

It was an eventful week in financial markets, and the mortgage market was no exception. With the Federal Reserve taking additional measures to combat the threatening credit crunch, including another interest rate cut of three- quarters of a percentage point, there was tremendous volatility in mortgage rates. Adjustable mortgage rates continue to climb as investors unload bonds backed by such loans and investor demand for new ARMs has sharply dropped. Fixed mortgage rates dropped sharply but still remain well above the level they would be in the absence of a credit crunch. The spread between conforming mortgage rates and yields on risk-free Treasury notes is more than three- quarters of a percentage point wider than normal. Jumbo mortgage rates are near 7.5 percent, reflecting the liquidity issues ailing the credit markets. Despite another substantial interest rate cut by the Federal Open Market Committee, mortgage rate movements have been driven by the credit crunch rather than anything the Fed has been doing with interest rates.

The mortgage rate winds can change direction quickly. Last week, the average 30-year fixed mortgage rate was 6.39 percent, meaning that a $200,000 loan would have carried a monthly payment of $1,249.70. With the average conforming 30-year fixed rate now 5.98 percent, the same $200,000 loan carries a monthly payment of $1,196.53.

SURVEY RESULTS
30-year fixed: 5.98% -- down from 6.39% last week (avg. points: 0.38)
15-year fixed: 5.46% -- down from 5.85% last week (avg. points: 0.37)
5/1 ARM: 6.44% -- up from 6.21% last week (avg. points: 0.60)

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, 64 percent, expect rates to rebound. Just 27 percent predict that rates will fall further, and the remaining 9 percent forecast that mortgage rates will remain more or less unchanged in the coming 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) ('Bankrate') 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. Bankrate.com 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 2007, Bankrate.com had nearly 60 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 and The New York Times (NYSE:NYT) . Bankrate.com's information is also distributed through more than 450 national and state publications. In addition to Bankrate.com, Bankrate also owns and operates Bankrate Select, an Internet lead aggregator and Mortgage Market Information Services, Inc. and Interest.com, Inc., each of which publishes mortgage guides and financial rates and information; Nationwide Card Services, which markets a comprehensive line of consumer and business credit cards via the Internet; and Savingforcollege.com, the premier Internet destination for objective information about 529 college savings plans.

For more information contact:
Kayleen Keneally
Senior Director, Corporate Communications
kkeneally@bankrate.com
917-368-8677

Source: Bankrate, Inc.

CONTACT: Kayleen Keneally, Senior Director, Corporate Communications,
+1-917-368-8677, kkeneally@bankrate.com

Web site: http://www.bankrate.com/
http://www.bankrate.com/mortgagerates
http://www.bankrate.com/RTI