Wednesday 19th of December 2018

Related Articles

Mortgage Rates Up for Third Consecutive Week

The interest rates on 30-year home mortgage loans rose to 5.03 percent this week, which represents the third week of consecutive rate increases.

According to a statement issued on Thursday by mortgage company Freddie Mac, the average rate climbed from 5.0% one week earlier. The previous time the average rate was higher was during the week of September 24, when the average rate was 5.04%.

The average interest rate on a fixed-rate mortgage with a 15-year term increased to 4.46% from 4.43% in the last seven days according to a statement by Freddie Mac.

Interest rates on adjustable-rate, five-year mortgages averaged about 4.42%, which is a slight increase from last week’s 4.4%. Interest rates on adjustable-rate, one-year mortgages climbed to 4.57% from 4.54%.

Prospective homebuyers can reduce their interest rates by purchasing points, which each point representing one percent of the mortgage’s total balance. In the Freddie Mac survey, the average number of points for home loans was 0.7 for 30-year loans and 0.6 points for one-year, five-year, and 15-year home loans.

“It’s still a very low rate by longer-term historical standards,” noted George Mokrzan, the senior economist at Huntington National Bank of Columbus, OH. “It’s still very supportive of the housing market and recovery.”

In 2008, the Federal Reserve Board promised to purchase bonds backed by home loans in order to drive down average rates. In March, the Fed boosted the size of the bond-buying program to $1.25 trillion.

The bonds bought from companies Fannie Mae, Freddie Mac, and Ginnie Mae encouraged lower yields on mortgage loan-backed securities and permitted lenders to lower rates on new home loans while still peddling the securities backed by the same loans at a respectable profit. This plan played an integral role in driving down interest rates to a record low 4.78% two times in the month of April.

The Fed’s security-purchasing program is set to wrap up during the first quarter of 2010, the Federal Open Market Committee said in a September 23rd statement.

A rapidly increasing cost of borrowing and doubts about whether Congress will prolong a government tax credit for first-time homebuyers may have precipitated the decline in applications this past week. Mortgage applications to purchase homes declined 5.2% in the week that ended on October 23 according to the Mortgage Bankers Association. Home refinancing transactions are also down by 16 percent.