Mortgage rates dropped significantly during the week ending August 20 according to the results of the Primary Mortgage Market Survey release this morning by Freddie Mac.

The 30-year fixed-rate mortgage (FRM) averaged 5.12 percent with 0.7 point compared to 5.29 percent with 0.7 point for the week ended August 13.  This is the lowest interest rate level for the 30-year FRM since the week ended May 28 when the rate was 4.91 percent.

The 15-year FRM dropped to 4.56 percent with 0.7 point from the average the previous week of 4.68 percent with 0.7 point.  The previous low for this product also occurred during the week ended May 28 when the rate was 4.53 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMS) fell 18 basis points to 4.57 percent.  Fees and points were unchanged at 0.6 point.  This is the lowest initial rate for the hybrid since January 2005 when Freddie Mac first began to track the product.

One-year Treasury-indexed ARMs averaged 4.69 percent this week, down from last week when it averaged 4.72 percent.  Fees and points increased to 0.5 point from 0.4 point.

“U.S. Treasury bond yields fell nearly a quarter of a percentage point over the week, and other long-term yields followed suit,” said Frank Nothaft, Freddie Mac vice president and chief economist.  “Interest rates on 30-year and 15-year fixed-rate mortgages fell to the lowest level since the end of May, while initial rates on 5/1 hybrid ARMs declined to levels not seen since January 2005.
 
“Low mortgage rates are helping to reinforce the housing market.  New construction on one-family homes rose for the fifth consecutive month in July to an annualized pace of almost 500,000 homes, the most since October 2008.  In addition, homebuilder views of housing market conditions for the remainder of the year rose for the second month in a row in August to the most positive reading since June 2008, according to the National Association of Home Builders.”
 
Earlier in the week Fannie Mae released information on its weekly yields for the week ended August 14.
 
The 30-year conventional FRM averaged 4.940 percent compared to 5.12 percent a week earlier while the 15-year FRM dropped from 4.42 to 4.25 percent.  Yields on government guaranteed FHA and VA loans were also lower, dropping from 5.84 percent to 5.56 percent.

One-year ARMs averaged 2.93 from 3.16 a week earlier.
 
All Fannie Mae yields are reported net of servicing fees.