Mortgage Rates Fall Last Week In Spite Of Rising For 4 Straight Weeks

We have been watching (like so many others) mortgage rates to see any impact from the Federal Reserve backing away from government backed mortgage bonds as of March 31st. See our March 27th BLOG Post. The big question was whether once those bonds had to be financed by the private sector... rates would have to rise to attract those investors.

Rates for long-term mortgages dropped last week but still remained above 5 percent, Freddie Mac said last Thursday. The average rate on a 30-year fixed rate mortgage was 5.07 percent, down from 5.21 percent the week before. It had our attention when the week of April 5th showed an average rate for a 30-year fixed mortgage at the highest since mid-August, when it was 5.29 percent. Rates had dropped to a record low of 4.71 percent in December, pushed down by a campaign by the Federal Reserve campaign in backing the mortgage bonds.

The average rate on a 15-year fixed-rate mortgage was 4.40 percent, down from 4.52 percent last week. Rates on five-year, adjustable-rate mortgages averaged 4.08 percent, down from 4.25 percent a week earlier. Rates on one-year, adjustable-rate mortgages dipped to 4.13 percent from 4.14 percent.

Although the program ended at the end of March, the Fed has left the door open to reviving the program if the economy weakens. Lower rates mean more affordable mortgages for Buyers. According to Bankrate.com, the Mortgage Rate Trend Index shows experts mixed in their forecasts with 39% believing rates will rise over the next week or so, 22% thinking they will fall and the other 39% thinking they will remain unchanged.

Don't hesitate to use our website for Mortgage Rate Comparison... and you can even apply online!

All Eyes On Fed-Back Program Ending March 31st

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.

Mortgage Rates At 2010 Low

With mortgage rates near their record low, many experts are advising Buyers to get their mortgage locked in now because these rates are likely to rise.

Based on a Bankrate.com survey of large lenders, the 30-year fixed-rate mortgage fell 4 basis points this week, to 5.11 percent. "The mortgages in this week's survey had an average total of 0.45 discount and origination points. One year ago, the mortgage index was 5.34 percent; four weeks ago, it was 5.15 percent." The 15-year fixed-rate mortgage fell 1 basis point, to 4.51 percent. The 5 Year ARM mortgage fell 5 basis points, to 4.51 percent.

"Mortgage professionals believe rates are poised to jump sharply within a few weeks." The rates are expected to rise because Federal Reserve plans to stop buying mortgage-backed securities by the end of March and many believe the result can be a rise of a full percentage increase in rates within the year!

Over the past year, the Fed has been purchasing up to 4/5th of new mortgage bonds keeping them at these low rates. Once they pull out and private financing has to back these bonds, many believe the rates will have to increase to get the private financing sector to accept the risk. Because of that, some are saying we will see 6% by year's end.

To compare rates and apply for a mortgage online, click here.