We are in the fifth straight week that Long-term rates dip!

Last week, Freddie Mac’s Primary Mortgage Market Survey showed that the 30-year fixed-rate mortgage (FRM) averaged 6.48% (with an average of 0.4 points) for the week ending August 24, 2006. This average is LOWER from last week; which was at 6.52%.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 6.14% for the same week (with an average of 0.5 points). This average is LOWER from last week when it averaged 6.18%.

One-year Treasury-indexed ARMs averaged 5.60% for the same week (with an average of 0.7 points). This average is LOWER from last week when the average was at 5.65%.

Frank Nothaft, Freddie Mac vice president and chief economist, explained “The Fed has acknowledged that it is closely monitoring the housing market as it slows down from last year’s record pace” “Although this fuels arguments about whether we will experience a soft landing or a bursting housing bubble, market watchers also perceive that it is possible that the Fed may stop raising short-term interest rates over the near term. This perception takes upward pressure off mortgage rates.”

Many are speculating that rates will continue to stabilize for the rest of the year and yet others speculate that rates might continue to rise a bit more for the end of the year. In reality nobody can predict the future but we should look at what is happening RIGHT NOW and see that interest rates have stopped rising and in some cases it has dropped enough for the consumer to take advantage and lock in good interest rates before a possible future increase. DON’T get stuck with an interest only ARM or an Option ARM loan in the hopes that rates won’t continue to rise.