30-Year Rates Climb Back Up to 4.87%
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Saturday, April 11, 2009
Rates on 30-year mortgages inched higher this week after two straight weeks of record lows but still remained at attractive levels for borrowers looking to refinance their home loans.
Mortgage finance giant Freddie Mac said Thursday that average rates on 30-year, fixed-rate mortgages rose to 4.87 percent this week from 4.78 percent last week. That was the lowest in the history of Freddie Mac's survey, which dates to 1971.
Rates have been below 5 percent for four consecutive weeks and are still down by a full percentage point from a year ago.
The low rates have sparked a surge in refinancing, with nearly 80 percent of new home-loan applications coming from borrowers seeking to refinance. Fannie Mae refinanced $77 billion in loans last month, nearly double February's level and the best month for such activity since 2003.
Mortgage rates fell dramatically over the winter. They declined further after the Federal Reserve said last month that it would buy $1.2 trillion in mortgage-backed securities and $300 billion in long-term government debt, which traditionally influences rates on 30-year home loans.
Frank E. Nothaft, Freddie Mac's chief economist, said in a statement that low rates "should keep homeowner affordability at record levels."
Lenders, however, have tightened their standards dramatically over the past year, so the best rates are available only to those with solid credit.
U.S. mortgage applications rose last week to the highest level in three months as consumers sought to buy homes and refinance existing loans.
The Mortgage Bankers Association's index of applications to purchase a home or refinance gained 4.7 percent in the week ended April 3, a fifth straight gain. The group's refinancing gauge rose 3.2 percent, and its purchase measure jumped 11 percent.
The average rate on a 15-year, fixed-rate mortgage inched up to 4.54 percent this week from 4.52 percent last week, according to Freddie Mac.
Rates on five-year, adjustable-rate mortgages rose to 4.93 percent from 4.92 percent. Rates on one-year, adjustable-rate mortgages rose to 4.83 percent from 4.75 percent.
Borrowers can reduce their interest rate by paying a fee called a point. Each point costs 1 percent of the mortgage amount. The nationwide average fee was 0.7 point last week for all mortgages in Freddie Mac's survey except for one-year adjustable mortgages, which had an average fee of 0.5 point.
