Good news for borrowers: mortgage rate remain low

By Palm Beach Business.com

DELRAY BEACH — Mortgage rates moved little over the past week, remaining near record lows, according to both Freddie Mac and Bankrate.com.

Freddie Mac’s Primary Mortgage Market Survey found the 30-year fixed-rate mortgage averaging 4.82 percent with an average 0.7 point down from last week’s 4.86 percent. A year ago at this time, the 30-year FRM averaged 5.98 percent.

Bankrate’s weekly national survey, meanwhile, pegged the 30-year at 5.24 percent with an average 0.43 point, up from 5.21 percent a week ago.

"Long-term fixed-rate mortgage rates have remained below 5.0 percent for the past 10 weeks as the U.S. Treasury and Federal Reserve act to keep interest rates low through security purchases," Freddie Mac chief economist Frank Nothaft said. "The Treasury purchased $136 billion in mortgage-backed securities through April and the Fed bought $740 billion through mid-May. In addition, the Fed purchased $115 billion in Treasury bonds since March of this year.”

Bankrate said the prospect of ongoing purchases of government and mortgage-backed debt, as well as the possibility that the Fed could increase the pace of those purchases should conditions warrant, will help keep a lid on rates for the balance of 2009.

Bankrate’s panel of mortgage experts reinforced the idea. More than half — 55 percent — expect mortgage rates to remain more or less unchanged over the next 30 to 45 days, while 38 percent see rates dropping. Only 7 percent forecast an increase in rates.

Also from the Freddie Mac survey:

The 15-year fixed rate mortgage averages 4.50 percent with 0.7 point, down from last week’s 4.52 percent. A year ago at this time, the 15-year FRM averaged 5.55 percent.

Five-year adjustable-rate mortgages (ARMs) averaged 4.79 percent this week, with 0.6 point, down from 4.82 percent.

One-year ARMs averaged 4.82 percent this week with 0.6 point, up from last week’s 4.71 percent. At this time last year, the 1-year ARM averaged 5.24 percent.

Also from the Bankrate survey:

The average 15-year fixed rate mortgage slipped to 4.74 percent, while the average jumbo 30-year fixed rate plunged to 6.37 percent. Adjustable rate mortgages were also mixed, with the average 1-year ARM retreating to 4.94 percent and the 5-year ARM jumping to 4.96 percent.

Six months ago, the average 30-year fixed mortgage rate was 6.33 percent, meaning a $200,000 loan would have carried a monthly payment of $1,241.86. With the average rate now more than one percentage point lower at 5.24 percent, the monthly payment for the same size loan would be $1,103.17, a savings of $138 per month for a homeowner refinancing now.