Mortgages getting cheaper again
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Applications for home loans jumped 9% last week as interest rates declined for all types of mortgages, falling back to an even 5% for 30-year fixed loans, the industry trade association is reporting today.
The Mortgage Bankers Assn. weekly survey is showing an increase in applications for both purchase and refinance loans. Presumably the decline in rates helped motivate borrowers.
The typical rate on the 30-year fixed mortgage had been 5.13% the week before last, the group says. Points paid to lenders (including the origination fee) also declined on 30-year loans, from an average 1.17% of the loan amount to 1.05%. Rates also fell for 15-year fixed mortgages and for variable rate loans as well.
The Mortgage Bankers Assn., which says its survey covers about half the home loans in the country, assumes that borrowers have good credit and have a 20% down payment or 20% equity in the home.
The typical 30-year rate dropped below 5% for much of November and December, then edged back higher this year. Are we headed back to fixed rates starting with 4s? There will be more evidence to consider tomorrow, when Freddie Mac reports on its survey of mortgages this week.
Meantime, the Fair Mortgage Collaborative said on its site today that the current national average for a 30-year fixed mortgage conforming to Fannie Mae and Freddie Mac standards is already below 5%, at 4.92%, with just under 1% in lender fees.
The Fair Mortgage Collaborative, a nonprofit start-up with funding from the Ford Foundation, may well be worth watching. It hopes to eventually provide detailed ZIP Code level data including rates, points and total closing costs that it says would help consumers avoid being ripped off by predatory lenders.
The system was providing only general descriptions of local rates and costs today. The group intends to eventually have a version that would allow consumers to input their credit scores, loan amount, down payment and other data to find out about what reasonable terms are available for their individual situations.
-- E. Scott Reckard
