Rates and ARM use Decline

According to some economists inflation is being held at bay, “The most recent economic indicators released this week showed that inflation is, indeed, being held in check," said Frank Nothaft, Freddie Mac vice president and chief economist. With good news on inflation the mortgage rates are down for the second straight week.

According to Freddie Mac, the national average on a 30-year fixed-rate mortgage dropped to 6.32 percent from 6.34 percent the previous week. The average rate on a five-year adjustable-rate mortgage also decreased to 5.96 percent this week but the average rate on a one-year ARM edged up to 5.41 percent.

With the recent run up of rates it is not surprising there has been a drop in California of borrowers electing to finance their homes with adjustable-rate mortgages. According to DataQuick Information Systems, 51.9 percent of all home buyers financed their purchases with an ARM in February, down from 63.7 percent in January, 68.7 percent in December and 70.9 percent in November.

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DataQuick: Steep drop in California ARM use
Realtor Magazine: Mortgage Rates Dip for 2nd Week