Mortgage Rates Fall Back After Spike

By:: Kirk Haverkamp | April 16, 2010

Mortgage rates cooled off last week, backing down from an abrupt spike that followed the end of a Federal Reserve program that had kept rates low for more than a year.

Average interest rates on 30-year fixed-rate mortgages fell to 5.07 percent, according to the weekly Freddie Mac survey, down from 5.21 percent the week before.

The decline almost exactly countered the previous week’s sharp increase, when rates rose from 5.08 percent for the week ending April 1.

Rates on other types of mortgages were down this past week as well. The average rate on 15-year fixed-rate mortgages fell to 4.40 percent, down from 4.52 percent previously, and the rate on 5-year Treasury indexed adjustable rate mortgages (ARMs) dropped to 4.08 percent, down from 4.25 percent the week before. The 30-year and ARM rate including an average 0.6 points paid; the 15-year rate was based on 0.7 points.

Observers attribute the decrease to mortgage markets overreacting to the end of the Fed’s program of purchasing mortgage-backed securities, which concluded March 30. Over the previous 15-months, the Fed purchased $1.25 trillion in mortgage securities to help keep interest rates low and stimulate the housing market, resulting in record- and near-record low interest rates through much of 2009 and into early 2010.

Many analysts had predicted rates would rise once the Fed stopped buying securities, although it had been winding down its purchases in recent months to help ease the transition. Many still expect rates to rise to at least the 5.5 percent range over the coming months and perhaps higher by year’s end.

The Freddie Mac survey is released every Thursday and reflects average rates for the week ending that day.

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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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