We have been keeping a close watch on mortgage rates with the March 31st deadline approaching. Rates have been kept down by the Fed’s $1.25 trillion program to buy up mortgage-backed securities issued by both Freddie Mac and Fannie Mae. That program is scheduled to end March 31st - this coming Wednesday. Rates on a 30-year mortgage had fallen to a low of 4.71 last December and has remained around 5% since then.
This week, mortgage rates on a 30-year fixed moved slightly higher to 4.99 but remained just below 5 percent. Many are concerned that mortgage rates could rise once the program ends, weakening the fragile recovery in housing and the overall economy. Once the Fed-based funding ends, these mortgage bond giants will be dependant on private funding. The looming question is whether private investors will demand a higher rate of return for their still somewhat risky mortgage bond investment. If that becomes the case, mortgage rates could climb quickly.
In addition this week, the average rate on a 15-year fixed-rate mortgage was 4.34 percent, up a bit from 4.33 percent last week, according to Freddie Mac.
Rates on five-year, adjustable-rate mortgages averaged 4.14 percent, up from 4.09 percent a week earlier.
Rates on one-year, adjustable-rate mortgages rose to 4.20 percent from 4.12 percent.
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