Mortgage rates retreated on hopes that consistent interest rate increases are winding down. The average 30-year fixed rate mortgage dropped from 6.39 percent to 6.34 percent, according to Bankrate.com's weekly national survey of large lenders. The 30-year fixed rate mortgages in this week's survey had an average of 0.39 discount and origination points.
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The average 15-year fixed mortgage rate decreased in a similar fashion, slumping from 5.95 percent to 5.92 percent. The average jumbo 30-year fixed rate fell from 6.57 percent to 6.51 percent. Adjustable rate mortgages dipped slightly, with the average 5/1 adjustable rate mortgage sliding from 5.89 percent to 5.88 percent, and the average one-year ARM slipping from 5.56 percent to 5.53 percent.
The Federal Open Market Committee's post-meeting statement issued Dec. 13 hinted that interest rates are now at a neutral level that neither helps nor hinders the economy, but stated that further increases may be needed to keep inflation under wraps. The acknowledgement that an end to interest rate hikes may be near was enough to push yields on ten-year Treasury securities and fixed mortgage rates lower. Mortgage rates are closely related to yields on long-term government bonds.
Fixed mortgage rates have increased compared to one year ago, but remain attractive in a historical context. Twelve months ago the average 30-year fixed mortgage rate was 5.69 percent, meaning that the monthly payment on a loan of $165,000 was $956.62. With the average 30-year fixed rate now 6.34 percent, the same loan would now carry a payment of $1,025.61. The decreased buying power brought about by higher mortgage rates could weigh on the housing market as borrowers grapple with higher interest rates on other obligations such as home equity lines, credit cards, and student loans.
SURVEY RESULTS
30-year fixed: 6.34% -- down from 6.39% last week (avg. points: 0.39)
15-year fixed: 5.92% -- down from 5.95% last week (avg. points: 0.35)
5/1 ARM: 5.88% -- down from 5.89% last week (avg. points: 0.29)
Bankrate's national weekly mortgage survey is conducted each Wednesday from data provided by the top 10 banks and thrifts in the top 10 markets.
For a full analysis of this week's move in mortgage rates, go to: http://www.bankrate.com/mortgagerates
The survey is complemented by Bankrate's weekly forward-looking Rate Trend Index, in which a panel of mortgage experts predicts which way the rates are headed over the next 30 to 45 days. This week, half of respondents expect rates to remain unchanged, while the other half are evenly split between rates falling further or rising over the next 30 to 45 days.
For the full mortgage Rate Trend Index, go to: http://www.bankrate.com/RTI
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Bankrate, Inc. (Nasdaq: RATE) owns and operates Bankrate.com, a leading Internet consumer banking marketplace. Bankrate.com is a destination site of personal finance channels, including banking, investing, taxes, debt management and college finance. It is the leading aggregator of more than 300 financial products, including mortgages, credit cards, new and used auto loans, money market accounts and CDs, checking and ATM fees, home equity loans and online banking fees. Bankrate.com reviews more than 4,800 financial institutions in 575 markets in 50 states. In 2004, Bankrate.com had over 38 million unique visitors. Bankrate.com provides financial applications and information to a network of more than 75 partners, including Yahoo! (Nasdaq: YHOO), America Online (NYSE: TWX), The Wall Street Journal (NYSE: DJ) and The New York Times (NYSE: NYT). Bankrate.com's information is also distributed through more than 150 national and state publications.
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