Mortgage Rates Mostly Unchanged

By:
Kirk Haverkamp | March 18, 2010

Mortgage rates remained stable this past week, posting only slight increases despite the approaching end of the Federal Reserve’s purchases of mortgage securities that have served to keep rates low over the past year.

Interest rates on both 30- and 15-year fixed-rate mortgages rose by a only single basis point in the weekly Freddie Mac rate survey, with 30-year rates at 4.96 percent and 15-year rates rising to 4.33 percent.
 
The five-year Treasury indexed adjustable rate mortgage (ARM) averaged 4.09 percent, up from 4.05 percent the previous week. The only rate reported that showed a decline was the one-year Treasury indexed ARM, which fell to 4.12 percent, down from 4.22 percent the week before.
 
All rates included an average of 0.6 points paid in fees.
 
Many analysts have been backing off their predictions of sharp rate increases once the Fed concludes its program of purchasing mortgage securities at the end of March. The Fed has been gradually reducing its purchases in recent months to minimize the impact of the program’s end, by which point it will have purchased a total of $1.25 trillion in mortgage securities over the past year.
 
Some say the market has already accounted for the upcoming end of the Fed’s purchases, meaning rates will increase slowly, if at all. A waiting pool of investors who have been largely shut out of the mortgage securities market is also expected to help take up the slack once the Fed’s program ends.
 
Even so, other analysts continue to predict that rates will reach 5.75 – 6 percent by the end of the year, though rising more slowly than previously predicted.

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