Lending Landscape - November 29, 2007

The rate portion of the lending landscape continues to improve. In the past week rates dropped to levels not seen since 2005.

Interest rates on fixed-rate mortgages slipped again this week as the glut of available homes exerted downward pressure on prices and construction activity, Freddie Mac reported Thursday.

The government-sponsored loan buyer said the rate on a 30-year fixed-rate loan fell to an average 6.10 percent for the week ended Nov. 29, from 6.20 percent the prior week. At this time last year, the 30-year FRM averaged 6.14 percent.

The 30-year rate has not been lower since the week ending Oct. 13, 2005, when it averaged 6.03 percent, Freddie Mac said.

Shorter term rates have also come down.

Freddie Mac said rates on 15-year fixed-rate loans averaged 5.73 percent, down from 5.83 percent last week. A year ago, the 15-year FRM averaged 5.87 percent. The 15-year rate has not been lower since the week ending January 26, 2006, when it averaged 5.70 percent.

Five-year adjustable-rate mortgages (ARMs) averaged 5.86 percent this week, down from 5.88 percent last week. A year ago, the five-year ARM averaged 5.95 percent.

The combination of falling interest rates and falling home prices (on a national level) is providing a very attractive atmosphere for people considering buying a new home.