Mortgage Rates Remain Stable

By:
Peter King | February 05, 2010

Mortgage rates edged up slightly this past week, rising just above the 5 percent mark for 30-year loans, according to the weekly Freddie Mac market survey.

The average rates on 30-year fixed-rate loans was 5.01 percent, up from 4.98 percent the week before, while the average on 15-year fixed-rate loans rose a single basis point, to 4.40 percent. Both involved an average of 0.6 points paid.
 
Rates on 5-year Treasury indexed hybrid adjustable rate loans rose to an average of 4.27 percent, with 0.6 points paid, up from 4.25 percent last week.
 
“Mortgage rates remained relatively stable for a second week amid news of a strengthening housing market," said Frank Nothaft, Freddie Mac chief economist. “Residential fixed investment rose for two consecutive quarters over the last half of 2009 following a steady quarterly decline since the beginning of 2006.”
 
He also noted that the National Association of Realtors reported  a 1 percent gain in existing home sales in December, following a big drop in November that broke a 9-month streak of consecutive increases. He said the Federal Reserve also reported that banks stopped tightening lending standards for most types of loans, except commercial real estate, in the fourth quarter of 2009, though they have not yet begun to relax them.
 
The Mortgage Bankers Association also reported an increase in mortgage applications in January, with the four-week moving average up 7.6 percent, including a 3.0 percent increase in purchase applications and a 9.4 percent increase in refinance applications.
 
Observers have been expecting a rise in mortgage interest rates as the Federal Reserve approaches the end of its yearlong program to buy 1.25 trillion in mortgage securities at the end of April. So far, however, rates have remained relatively stable, hovering around the 5 percent level the past two months.
 
Adjustable rate mortgages have seen a steep decline in interest rates over the past year as lenders become more comfortable offering the loans again. One year ago, the average rate on the five-year Treasury hybrid ARM was 5.25 percent, nearly a full percent above the current week’s average. By comparison, one year ago the average rates on 30- and 15-year fixed-rate loans were 5.25 and 4.92 percent, respectively, approximately one-quarter and one-half a percent above this week’s levels.

 

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