Bankrate: Mortgage Rates Plunge on Signs of Credit Thaw

NEW YORK, Oct. 23 /PRNewswire-FirstCall/ -- Mortgage rates reversed course
in a big way this week, with the average 30-year fixed mortgage rate dropping
from 6.74 percent to 6.32 percent. According to Bankrate.com's weekly national
survey, the average 30-year fixed mortgage has an average of 0.39 discount and
origination points.
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The average 15-year fixed rate mortgage nosedived to 5.93 percent, while
the average jumbo 30-year fixed rate dropped to 6.32 percent. Adjustable
mortgage rates were moderately lower, with the average 1-year ARM now 6.14
percent and the average 5/1 ARM sinking to 6.49 percent.
One week after posting the biggest one week increase since April 1987,
mortgage rates staged the largest one week decline since May 1995. Tentative
signs that the credit freeze is beginning to thaw, as evidenced by a drop in
1-month and 3-month LIBOR of over 100 basis points in the past week, sparked
the reversal in mortgage rates. In addition, yields on benchmark 10-year
Treasury notes also dropped as worries about a deep and prolonged recession
predominated. Mortgage rates move in relation to Treasury yields, but at a
spread -- or markup -- over the risk-free government debt. With Treasury
yields falling and mortgage credit spreads narrowing, mortgage borrowers had
two factors working in their favor. This is in stark contrast to one week ago
when both factors were working against them.
The major retreat in mortgage rates over the past week has a direct impact
on a homebuyer's affordability. At last week's rate of 6.74 percent, a
$200,000 loan carried a monthly payment of $1,295.87. This week, with the
average rate at 6.32 percent, the monthly payment on a $200,000 loan is
$1,240.55.
SURVEY RESULTS
30-year fixed: 6.32% -- up from 6.74% last week (avg. points: 0.39)
15-year fixed: 5.93% -- up from 6.40% last week (avg. points: 0.42)
5/1 ARM: 6.49% -- up from 6.61% last week (avg. points: 0.54)

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. There is not a clear consensus, with 46
percent of respondents expecting rates to pull back further in the coming
weeks and 39 percent predicting that rates will remain more or less unchanged.
Only 15 percent forecast a rebound in mortgage rates over the next 30 to 45
days.
For the full mortgage Rate Trend Index, go to
http://www.bankrate.com/RTI.
About Bankrate, Inc. (Nasdaq: RATE)
The Bankrate network of companies includes Bankrate.com, Interest.com,
Mortgage-calc.com, Nationwide Card Services, Savingforcollege.com, Fee
Disclosure and InsureMe. Each of these businesses helps consumers to make
informed decisions about their personal finance matters. The company's
flagship brand, 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 rates and other information
on 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 500 newspapers.
For more information contact:
Kayleen Keneally
Senior Director, Corporate Communications
kkeneally@bankrate.com
917-368-8677

SOURCE Bankrate, Inc.

Kayleen Keneally, Senior Director, Corporate Communications, of Bankrate,
Inc., +1-917-368-8677