Mortgage Interest Rates Reverse Six-Week Decline

By:
Kara Johnson | December 09, 2009
Interest rates on 30-year fixed rate mortgages rose last week, breaking a streak of six consecutive weeks of declines, according to figures released today by the Mortgage Bankers Association.
 
The average interest rate on 30-year fixed rate mortgages rose to 4.88 percent with 1.17 points paid, up from 4.77 percent and 1.0 points the week before. The average on 15-year fixed-rate loans was up to 4.33 percent from 4.27 percent the week before, although the average points declined to 1.02 from 1.33 the week before.
 
The new figures reverse a trend that had seen declining rates since late October, when average rates on 30-year fixed rate mortgages were at 5.07 percent and 15-year rates were at 4.53 percent. Average rates in the MBA weekly survey typically run somewhat lower than other leading surveys due to differences in survey methods.
 
Mortgage applications for the week were up 8.5 percent compared to the previous week, with an 11.0 percent increase in refinance applications and purchase applications up 4.0 percent from the week before. Refinances made up 74.4 percent of all applications, up from 72.1 percent the week before, while adjustable rate mortgages accounted for 4.7 percent of all applications, down one-tenth of a point from the previous week. The current MBA survey covers the week ending Friday, Dec. 4.
 

Decline in home values slowed in 2009

 
Meanwhile, a new report released today by the real estate assessment firm Zillow calculates that the total decline in U.S. housing values in 2009 will be about $500 billion. As grim as that sounds, it’s a significant improvement over 2008, when U.S. homeowners lost an estimated $3.8 trillion in housing values.
 
All told, the total value of the U.S. housing market has fallen by $5.9 trillion since peaking in 2006, according to Zillow. By comparison, U.S. homeowners currently have a total net worth of $53.1 trillion, according to the Federal Reserve.
 
Even so, home prices appeared to be stabilizing over the summer, the company reported, leading to a slight decrease in “underwater” homeowners, with the percentage of homeowners with negative equity in their homes falling to 21 percent in the third quarter of the year from 23 percent the previous quarter.
 
Even so, the report predicts that rising mortgage interest rates and large numbers of foreclosures will place downward pressure on home values in 2010.
 
Just under one-third of U.S. metropolitan areas saw increases in housing values in 2009, according to the report, with Boston and Providence (R.I.) posting the largest increases in terms of absolute dollars. The biggest dollar-value declines were in Los Angeles, Chicago and New York.

 

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