Mortgage rates drop after Freddie, Fannie bailout
After the government took control of the troubled mortgage giants, the 30-year fixed rate dipped to 5.93%.
New York (CNNMoney.com) -- Rates on 30-year mortgages dropped, after the U.S. government took control of mortgage financing giants Fannie Mae and Freddie Mac last weekend.
The Primary Mortgage Market Survey from mortgage finance company Freddie Mac (FRE, Fortune 500) said that rates on 30-year fixed-rate mortgages (FRMs) averaged 5.93% for the week ended September 11, with an average 0.7 point discount. That's down from an average 6.35% last week, and down from an average of 6.31% recorded during the same week last year.
"Interest rates for 30-year fixed-rate mortgages are down almost 0.6 percentage points over the past 4 weeks, which will help to spur home purchases and loan refinancing in coming weeks," said Frank Nothaft, Freddie Mac's vice president and chief economist.
"This means that the monthly principal and interest payment on a new $200,000 loan is over $76 lower than a month ago," he addend.
A 15-year FRM averaged 5.54%, falling from 5.90% last week and 5.97% from a year ago.
The five-year adjustable rate mortgage (ARM) dropped to 5.87% from 5.97% last week, and 6.17% a year ago.
One-year ARMs averaged 5.21%, a slight increase from a week ago when it stood at 5.15%. That's down from a year ago when the rate averaged 5.66%.
Under the terms of the bailout, the Treasury will buy mortgage backed securities owned by Freddie (FRE, Fortune 500), as well as Fannie Mae (FNM, Fortune 500), in order to boost liquidity in the mortgage market. The government may also loan the entities up to $200 billion. 
