Posted May 4, 2012

Freddie Mac’s “Lowest Mortgage Rates In History” : Just Smoke and Mirrors?

3.84% mortgage rate reported by Freddie Mac

3.84% mortgage rate reported by Freddie Mac

125 Banks : Mortgage Rates To All-Time Lows

Thursday, Freddie Mac published its weekly Primary Mortgage Market Survey (PMMS). Based on data from more than 125 banks nationwide, the government-backed group says mortgage rates have reached all-time lows.

It's a great story for both refinancing homeowners from Seattle, Washington to Miami, Florida; and for home-buying residents everywhere. With low mortgage rates come low mortgage payments and with low mortgage payments comes high levels of home affordability.

This is good for housing, and good for the economy.

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Is Freddie Mac's Survey Deceiving Us?

According to the Freddie Mac's survey, the average 30-year fixed rate mortgage rate fell to 3.84% last week for borrowers willing to pay 0.8 discount points plus a full set of closing costs.

This is 4 basis points lower than last week's 3.88% average 30-year fixed-rate mortgage rate.

The 15-year fixed-rate mortgage rate fell, too, reaching 3.07% with an accompanying 0.7 discount points plus closing costs. Both mortgage products -- the 30-year and the 15-year --have dropped to their lowest surveyed rate in history.

Or have they?

Although 30-year fixed rate mortgage rates dropped to 3.84% and, although the 15-year fixed rate mortgage rate dropped to 3.07%, the accompanying number of discount points required to lock these rates rose to 0.8 and 0.7, respectively. Each is a one-tenth of one percent increase from the week prior.

In other words, mortgage rates didn't really drop to new lows.

This week's mortgage rates are the same as the were the week before. Lower mortgage rates with higher fees is not an improvement -- it's accounting trick.

Get your personalized mortgage rate.

The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.

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Mortgage loan limits for every U.S. county,
as published by Fannie Mae & Freddie Mac, and the FHA.