Mortgage Rates Show Modest Rise

By:: Peter King | January 26, 2012

Mortgage rates headed upward this week, ending a three-week stretch of all-time lows for 30-year fixed-rate loans.

Average interest rates on the standard 30-year mortgage rose to 3.98 percent this week, according to the weekly Freddie Mac rate survey, up from last week’s record low of 3.88 percent. The rate had reached or equaled its all-time low in each of the two previous weeks as well.

Thirty-year mortgage rates have now been at or below the 4 percent mark for three full months. The last time Freddie Mac reported a 30-year rate above 4.00 percent was the week of Oct. 27, when it stood at 4.10 percent.

15-year fixed, 5-year ARMs also up

Interest rates on 15-year mortgages and 5-year adjustable-rate mortgages (ARMs) also rose after hitting record lows last week. Average rates on15-year fixed-rate loans increased to 3.24 percent, up from last week’s record of 3.17 percent, while 5-year Treasury indexed ARMs rose to 2.85 percent, up from a record low of 2.82 percent last week.

Frank Nothaft, Freddie Mac chief economist, said the rate increase followed a spate of positive news on the housing market, including reports that sales and construction of single-family homes both picked up in December to end 2011 on a positive note.

Fed intends to keep rates low

Meanwhile, the Federal Reserve appears inclined to allow interest rates to remain low for an extended period, announcing this week that it does not expect to raise the interest rates it charges banks for short-term loans, currently near zero, until 2014. Such a move means mortgage rates will likely remain low during that period, although any improvements in the economy would likely produce at least modest increases in rates.

The reported rates on 30-year loans and 5-year ARMs include 0.7 points in discounts and origination fees, while the 15-year mortgages include 0.8 points. All are based on mortgages with an 80 percent loan-to-value ratio.

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National Rates

Loan Type	Today	+/-
30 yr fixed	3.81
15 yr fixed	3.15
5/1 ARM	2.73

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