RISMEDIA, August 10, 2007– It was a topsy-turvy week for mortgage rates, with the average conforming 30-year fixed mortgage rate falling to 6.66 percent. According to Bankrate.com’s weekly national survey of large lenders, the average 30-year fixed mortgage has an average of 0.25 discount and origination points.
The average 15-year fixed rate mortgage popular for refinancing pulled back similarly to 6.33 percent. But it was a much different story on larger loans and adjustable rate mortgages. The average jumbo 30-year fixed rate jumped to 7.35 percent, the highest since April 2002. Adjustable rate mortgages soared too, with the average 5/1 ARM climbing to 6.55 percent and the average one-year ARM rebounding to 6.15 percent.
Rates for jumbo mortgages, those larger than $417,000, have been increasing as investors command a bigger mark-up for loans that come without any guarantees against default. At a time when conforming fixed mortgage rates have fallen, borrowers in high-cost areas and wealthier borrowers buying bigger homes are seeing much higher rates. The spread between the average conforming and jumbo fixed rates has increased from 0.28 percentage point to 0.69 percentage point in the past two weeks! And add adjustable mortgage rates to the list, with rates on hybrid ARMs jumping this week, some to levels higher than a fixed rate loan. The average 7/1 and 10/1 ARM rates are both higher than the average fixed rate, at 6.67 percent and 6.81 percent, respectively. The place for borrowers to be in today’s market is the fixed rate mortgage, especially if they’re borrowing less than $417,000.
Despite the turbulence in mortgage markets, fixed mortgage rates are an attractive option for most borrowers. Three months ago, the average 30-year fixed mortgage rate was 6.29 percent, meaning that a $200,000 loan would have carried a monthly payment of $1,236.64. Even now, the average conforming 30- year fixed rate is just 6.66 percent, and a $200,000 loan carries a monthly payment of $1,285.25. Fixed mortgage rates still remain the better refinancing alternative for adjustable rate borrowers facing sharp payment adjustments.
30-year fixed: 6.66% — down from 6.71% last week (avg. points: 0.25)
15-year fixed: 6.33% — down from 6.38% last week (avg. points: 0.25)
5/1 ARM: 6.55% — up from 6.36% last week (avg. points: 0.21)
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 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, it is a tossup. A plurality of the panelists, 38 percent, expect rates to decline. The remainder are evenly split, with 31 percent forecasting an increase and an equal 31 percent predicting rates will remain more or less unchanged in the next 30 to 45 days.
For the full mortgage Rate Trend Index, go to www.bankrate.com/RTI