Fixed mortgage rates up a bit; 5-year hybrid loan at record low
Fixed mortgage rates edged back up this week from record lows, but a popular type of variable-rate loan remained in record territory, according to Freddie Mac's weekly survey of lenders.
Five-year hybrid adjustable loans, which have a fixed rate for the first five years, were being offered at initial rates averaging 3.07% this week, Freddie Mac said in a report Thursday, down a touch from the previous record of 3.08%. The borrowers would have paid 0.5% of the loan amount to lenders in upfront fees.
At that rate, the monthly principal and interest payment on a $400,000 mortgage would be $1,701.55, although homeowners also are on the hook for property taxes and insurance.
And of course, a five-year hybrid means exposure to whatever interest rates may be when the loans become adjustable -- and they are not likely to be as favorable as today.
Mortgage rates take their cues from Treasury bonds, and the yield on the benchmark 10-year Treasury was at 2.25% Thursday morning -- up sharply from earlier this week but still astonishingly low by historical standards.
Most people these days are seeking out the certainty of fixed-rate mortgages. Freddie Mac said the lenders it surveyed were offering 30-year fixed home loans early this week at an average 4.22% with 0.7% in lender fees, up slightly from last week's 4.15%, which was the all-time low since Freddie Mac began its survey in 1971.
At 4.22%, the monthly principal and interest payments on a 30-year fixed mortgage of $400,000 would total $1,960.74, a mortgage calculator shows.
Low rates alone can't heal housing, of course. Even as fixed rates hit record lows last week, fewer people were applying for mortgages, the Mortgage Bankers Assn. said in a report. Applications to purchase homes are at their lowest level since 1996, the MBA said.
--E. Scott Reckard
Photo: Foreclosures have fallen, but newly delinquent loans have increased and home sales remain slow. Credit: Associated Press / David Zalubowski.