Fixed Mortgage Rates Head Up

By:: Kara Johnson | April 01, 2010

Fixed mortgage rates headed higher this past week, with the standard 30-year fixed-rate mortgage rising back above 5 percent for the first time in a month.

The average rate on a 30-year fixed-rate mortgage was 5.08 percent for the week ending April 1, according to the weekly Freddie Mac survey, up from 4.99 percent the week before. Rates on 15-year fixed-rate loans posted a slightly smaller increase, up to 4.39 percent from 4.34 percent the week before.

By contrast, rates on adjustable rate mortgages (ARMs) declined for the week, with 5-year Treasury indexed ARMs dropping to 4.10 percent, down from 4.14 percent the week before; and its 1-year counterpart taking a big drop, averaging 4.05 percent, down from 4.20 percent last week.

The 30-year rate including an average of 0.7 discount points; the other three included 0.6 points.

It was the last week before the Federal Reserve concluded its purchases of $1.25 trillion in mortgage securities, conducted over the past 15 months and credited with driving mortgage interest rates to record lows. However, rates have remained stable as the March 30 date for ending the program approached, with rates fluctuating between 5.09 percent and 4.93 percent since the first of the year.

Home purchase applications increasing

Applications for mortgages to make home purchases have been rising over the past month, suggesting that the extended and expanded homebuyer tax credit may finally be gaining traction. Applications for home purchase mortgages have increased an average of 5.4 percent each week over the past month, according to figures released Wednesday by the Mortgage Bankers Association (MBA), with an increase of 6.8 percent last week.

"Purchase applications have increased over the past month, and are now at their highest level since last October when many homebuyers were rushing to get loans closed before the expected expiration of the homebuyer tax credit," said Michael Fratantoni, MBA Vice President of Research and Economics. "We may be seeing a similar pattern now, as the extended version of the tax credit ends next month."

The $8,000 tax credit for first time homebuyers was originally slated to conclude at the end of November 2009. Congress voted in early November to extend it through April 30, 2010 and add a $6,500 credit for repeat buyers.

However, government and private surveys of homebuyer activity have shown little impact from the credit from December through February, possibly due to the lead time required in shopping for a home. The rising purchase applications in March suggest that buyers may now be ready to act.

The MBA survey covers the week ending Friday, March 26; figures are seasonally adjusted.

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Loan Type	Today	+/-
30 yr fixed	3.69
15 yr fixed	3.00
5/1 ARM	2.75

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