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Bankrate: Mortgage Rates Fall But Spreads at 22-Year High
New York, New York, USA, 21 August 2008 -- /PRNewswire/ -- Mortgage rates retreated, with the average conforming 30-year fixed mortgage rate falling to 6.66%. According to Bankrate.com's weekly national survey of large lenders, the average 30-year fixed mortgage has an average of 0.4 discount and origination points.

The average 15-year fixed rate mortgage popular for refinancing dropped to 6.18%, while the average jumbo 30-year fixed rate is now 7.62%. Adjustable mortgage rates were lower, with the average 1-year ARM inching back to 6.24% and the average 5/1 ARM down to 6.26%.

Even though mortgage rates declined this week, they remain nearly one full percentage point higher than expected, given the yield on benchmark Treasury yields. One year ago, when the credit crunch began, the average 30-year fixed mortgage rate was 6.58%. While that isn't much different than the average of 6.66% today, the yield on benchmark 10-year Treasury notes was considerably higher 12 months ago, at 4.7%. Now, the T-note yield is 3.79%. The spread between mortgage rates and Treasury yields, currently around 280 basis points, is 100 basis points wider than it was one year ago and the widest since 1986. Why? Investor skittishness about continued delinquencies and defaults has resulted in higher risk premiums, with additional fees layered on by Fannie Mae and Freddie Mac also increasing costs to borrowers.

Although mortgage rates have been relatively calm in recent weeks, it has been a wild ride for much of 2008. Three months ago, the average 30-year fixed mortgage rate was 6.02%, meaning that a USD 200,000 loan would have carried a monthly payment of USD 1,201.67. But at today's rate of 6.66%, a USD 200,000 loan would mean a monthly payment of USD 1,285.25.

Survey Results:
  • 30-year fixed: 6.66% -- down from 6.74% last week (avg. points: 0.4)
  • 15-year fixed: 6.18% -- down from 6.26% last week (avg. points: 0.41)
  • 5/1 ARM: 6.26% -- down from 6.34% last week (avg. points: 0.42)

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. This week, half of the panelists expect mortgage rates to remain more or less unchanged. The other half are split, with 29% predicting an increase in mortgage rates and just 21% forecasting a decline in 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 4800 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.

Web site: http://www.bankrate.com/

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