Home Mortgage Loan Rates Rise, But Maintain Low Level
Friday, November 5th, 2010Rates for 30-year fixed home mortgage loan rose during the week to 4.23% from 4.21% last week. Despite the increase, rates remain near the lowest level recorded in the U.S. since 1971. During the early part of October, rates recorded their lowest levels in almost four decades at 4.19%.
For 15-year fixed mortgages, the average rate is pegged at 3.66%. It also represents an increase from last week's 3.64% average. Base on mortgage industry data, loan rates have been declining steadily since April 2010. Analysts have explained that rates have remained low in October primarily because investors are buying up bonds from Treasury to prepare for the next move of the Federal Reserve.
According to analysts, investors are expecting the Fed to buy Treasury bonds in an effort to stimulate the U.S. economy. This expected action resulted in lower Treasury yields and in turn resulted in the rise of mortgage rates. Analysts further added that although lower home mortgage loan rates were unable to stimulate the housing industry, they did result in refinancing improvements.
Meanwhile, rates for adjustable five-year loans averaged 3.41%, representing a decline from the previous week's average of 3.45%. For adjustable one-year loans, rates remained the same for the second consecutive week at 3.3%. According to mortgage industry analysts, these rates are exclusive of points or add-on fees. They explained that one point has the equivalent of 1% of the total amount of mortgage loan.
A survey by Freddie Mac revealed that the loan fee average for 30-year mortgages is 0.8 per point. For 15-year and one-year loans, the average is 0.7 per point, while five-year loans have an average of 0.6 per point. To come up with the average loan rates, Freddie Mac gathers rates from banks and lenders all over the U.S. during the first three working days of each week. These rates though, can change significantly within a single day.
Home mortgage loan rates this week are still close to the lowest levels on record, but analysts declare that it is an increase just the same. However, they stated that the impact of the increase on the housing market will not be fully determined until the Federal Reserve has taken action.
