Mortgage Rates Flat This Week
Rates on 30-year mortgages remained almost flat this week as the Federal Reserve said it would keep rates near record lows to help the economy recover. The average rate on a 30-year fixed mortgage was 4.98% this week, down slightly from 4.99% last week, Freddie Mac said Thursday. Last year at this time, the average rate for a 30-year fixed mortgage was 5.10%.
Rates are still above the record low of 4.71% set in early December. They’ve been held around 5% by a Federal Reserve program to pump $1.25 trillion into mortgage-backed securities to try to keep rates low and make home buying more affordable. On Wednesday, the Fed said it still expects to end the program as scheduled on March 31. However, the central bank did say that it remains open to changing that timetable if necessary.
Low interest rates also tend to lure borrowers to refinance. In last year’s fourth quarter, 33% of borrowers who refinanced their mortgage chose to lower their principal balance rather that extract cash from their home equity, the highest share since Freddie Mac started tracking refinance transactions in 1985. In turn, only about $11 billion in home equity was cashed out by homeowners who refinanced their conventional prime mortgage, the smallest quarterly amount in nine years, Freddie Mac said.
Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day, often in line with long-term Treasury bonds.
The average rate on 15-year fixed-rate mortgages fell slightly to 4.39% from 4.40% last week, according to Freddie Mac. Rates on five-year, adjustable-rate mortgages averaged 4.25%, down from 4.27% a week earlier. Rates on one-year, adjustable-rate mortgages dropped to 4.29% from 4.32%.
The rates do not include add-on fees known as points. The nationwide fee for loans in Freddie Mac’s survey averaged 0.6 point for 30-year, 15-year and five-year loans. It averaged 0.5 point for one-year loans.
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