Fixed-Rate Mortgages Retreat From Record Lows

Fixed-rate mortgages edged up this week from their lowest levels in decades, according to Freddie Mac’s weekly survey of lenders.

The average 30-year, fixed-rate mortgage was 4.22 percent this week, up from the record low of 4.15 percent last week. A year ago at this time, the average 30-year rate was 4.36 percent.

In addition to the 30-year rates, 15-year fixed rate mortgages posted similar increases, rising to 3.44 percent, up from 3.36 percent last week, also a record low.A year ago, the average 15-year rate was 3.86 percent.

According to Freddie Mac chief economist Frank Nothaft, the rise in fixed-mortgage rates followed an increase in Treasury bond yields, which typically set the tone for interest rates in general.

Acknowledging that low rates alone couldn’t heal the current housing crisis, Nothaft expressed an optimistic outlook being that several other economic developments also suggested a modest improvement in the housing market.

“The Federal Housing Finance Agency’s national house price index rose for the third straight month in June,” he explained, also pointing out that the Mortgage Bankers Association said that the serious delinquency rate for mortgages outstanding fell for the sixth consecutive quarter to 7.85 percent.

Despite the upward trend with fixed mortgages, one popular type of variable-rate loan set a new record low, but just barely. Average interest rates on 5-year Treasury indexed ARMs fell to 3.07 percent last week, down from the previous record of 3.08 percent last week.

via CSM