Freddie Mac reports rise in mortgage rates
This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts.
Tracking a jump in interest rates on U.S. Treasury bonds, home loan rates moved higher this week, with lenders offering an average 5.21% for a 30-year fixed-rate mortgage -- an eight-month high and up from 5.08% the previous week, Freddie Mac reported.
The yield on the 10-year Treasury note, a benchmark for fixed mortgage rates, approached 4% early this week before falling back. It had declined to about 3.85% by Thursday morning -- potential good news for home loan shoppers worried that rates could move still higher.
Indeed, lenders shaved an eighth of a percentage point late Wednesday off their offering rates, and some solid borrowers who paid 1% of the loan amount in upfront fees were able to obtain 30-year fixed mortgages for less than 5%, said Edward Ferrara, whose Orange County-based website monitors the price lists that lenders provide to mortgage brokers.
‘Rates improved a little yesterday,’ Jeff Lazerson, a Laguna Niguel loan broker, said in an e-mail to The Times. ‘I can offer a well-qualified borrower 4.875% at 1 point for a 30-year fixed.’
The 5.21% rate on the 30-year mortgage is a national average of lender offering rates compiled Monday through Wednesday, Freddie Mac said. It was the highest for the Freddie Mac survey since Aug. 13. Last year at this time, the average was 4.87%.
Rates on 15-year fixed-rate mortgages and adjustable-rate loans moved higher as well over the course of the last week, Freddie Mac said. The complete survey was expected to be posted later in the day at www.freddiemac.com/pmms/.
Mortgage rates are still remarkably low by historical standards, reflecting dormant inflation and government programs aimed at stimulating the economy. One key initiative, in which the Federal Reserve purchased $1.25 trillion in mortgage bonds guaranteed by Freddie Mac, Fannie Mae and other government-sponsored entities, ended last week, pushing rates slightly higher as the market for these bonds reverted to the private sector.
But mortgage investors said the main reason for the move upward was concern that an improving economy, coupled with the government’s huge deficit spending, would rekindle inflation.
Freddie Mac asks lenders to provide popular combinations of interest rates and upfront lender fees for well-qualified borrowers who have at least 20% downpayments or, in the case of refinancing transactions, an equivalent amount of equity in their homes.
On the 30-year fixed mortgage in the latest survey, the lenders were requiring borrowers to pay 0.6% of the loan balance upfront, to cover origination costs and payments made to lower the interest rate., Freddie Mac said.
-- E. Scott Reckard
