Mortgage Rates Post Significant Drop

By:: Kara Johnson | March 16, 2011

Mortgage rates posted a big decline last week, although borrowers didn’t respond with renewed efforts to refinance current mortgages.

Average interest rates on both 30- and 15-year fixed-rate mortgages fell by 14 basis points over the week, according to new survey figures from the Mortgage Bankers Association. The average rate on 30-year loans fell to 4.79 percent, while the average on 15-year rates fell to 4.03 percent, respectively.

It’s the lowest the 30-year loan has been in two months, while the 15-year mortgage hit its lowest mark since early December. Last week’s average rates on the two loans were 4.93 percent and 4.17 percent, respectively.

Despite the sharp decline, homeowners did not respond by seeking to lock in refinance rates, as they often do when rates show a significant drop. Applications to refinance existing mortgages increased by only 0.7 percent over the previous week, on a seasonally adjusted basis.

Mortgage applications for home purchases, which are less sensitive to fluctuations in interest rates, fell by a seasonally adjusted 4.0 percent from the previous week.

Even with last week’s figures, however, refinance applications have increased an average of 6.6 percent a week over the past four weeks, while home purchase applications are up a weekly average of 1.6 percent over the same period.

The rate decline on 30-year mortgages was somewhat offset by an increase in average points paid, which rose to 1.07 points, up from 0.87 previously, although the effective rate still declined. Meanwhile, the drop in rates on 15-year loans was actually magnified by a drop in average points paid on those loans, which fell to 0.85 points from 1.15 points previously.

All figures are for 80-percent loan-to-value mortgages for the week ending Friday, March 11.

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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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