Mortgage Rates Drop Back Below 5 Percent

By:: Peter King | February 11, 2010

Average interest rates on 30-year mortgages dropped back below 5 percent this week, despite looming concerns over significant increases in the near future.

According to the weekly Freddie Mac market survey, the average rate on 30-year fixed rate mortgages was 4.97 percent for the week ending Feb. 10, down from 5.01 percent the week before. Rates on 15-year fixed-rate mortgage loans averaged 4.36 percent, down from 4.40 percent the week before.

The average rate on 5-year Treasury indexed adjustable rate mortgages was 4.19 percent, down from 4.27 percent the week before.

“Interest rates on 30-year fixed-rate mortgages are below 5 percent for a third week this year, which helps a number of homeowners to refinance their existing housing debt” said Frank Nothaft, Freddie chief economist. “In mid-June of last year, for example, 30-year fixed-mortgage rates topped nearly 5.6 percent. Currently, the monthly payments would be almost $77 per month lower on a $200,000 loan balance.”

Mortgage refinances increasing

Refinance activity increased slightly last week, according to Wednesday’s report by the Mortgage Banker’s Association (MBA), increasing a seasonally adjusted 1.4 percent. Over the past month, mortgage refinance applications are up 4.8 percent, according to the MBA, and currently make up nearly 7 out of 10 mortgage applications.

Mortgage applications for home purchases declined 1.4 percent this past week, but are up 0.8 percent over the past month.

Rates on 30-year fixed-rate mortgages have remained near or below the 5 percent mark for nearly all of the past three months, even as markets have been looking ahead to the Federal Reserve ending its program of purchasing mortgage securities at the end of March. Most observers expect 30-year rates to rise significantly following the end of that program, but so far there has been little change in anticipation of that event.

Current rates remain well below their levels of one year ago, particularly on ARMs and the 15-year fixed rate. One year ago this week, the 5-year hybrid ARM averaged 5.23 percent, nearly a full percentage point higher than the current rate, while 15-year fixed-rate mortgages averaged 4.81 percent, nearly half a percent higher. By comparison, the average rate on 30-year fixed-rate loans one year ago was 5.16 percent, about two-tenths of a percent higher than the current week.

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National Rates

Loan Type	Today	+/-
30 yr fixed	3.72
15 yr fixed	3.03
5/1 ARM	2.75

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