| Mortgage
rates mixed, mostly flat | | By Holden
Lewis • Bankrate.com |
| Mortgage rates have idled in neutral
for five weeks.
The benchmark 30-year fixed-rate mortgage rose 3
basis points to 6.22 percent, according to the Bankrate.com national survey of
large lenders. A basis point is one-hundredth of 1 percentage point. The mortgages
in this week's survey had an average total of 0.29 discount and origination points.
One year ago, the mortgage index was 6.44 percent; four weeks ago, it was 6.2
percent. The 15-year fixed-rate mortgage fell 1 basis point, to 5.92 percent.
The 5/1 adjustable-rate mortgage fell 3 basis points, to 6.05 percent.
 |
Weekly national mortgage survey |
|
| This week's rate: | 6.22% | 5.92% | 6.05% |
| Change from last week: | +0.03 |
-0.01 | -0.03 |
| Monthly payment: | $1,012.72 | $1,385.24 | $994.57 |
| Change from last week: | +$3.22 | -$0.89 | -3.19 |
Unusually flat mortgage rates
In the last five weeks, the benchmark 30-year rate has dropped as
low as 6.16 percent and risen as high as this week's 6.22 percent.
It's unusual for rates to remain in such a tight range for a month
or more, but something similar happened in the last two weeks of
2006 and first three weeks of 2007, when rates remained in a range
of 6.2 to 6.26 percent.
If you're a complete geek, go ahead and read
the following sentences, and if not, skip to the next paragraph. The 30-year rate
is so steady that this week's four-week moving average is the same as last week's
four-week moving average: 6.19 percent. Trot out that little bit of trivia the
next time you want to fill an awkward silence with the other parents at your kid's
soccer practice. Then, while they're mesmerized by your command of mortgage factoids,
dazzle them with the following info: The chairman of the Federal Reserve,
Ben Bernanke, told a joint committee of Congress this week that the overall economy
has slowed down because of "the substantial correction in the housing market."
Now, if you're trying to sell a house and the value has fallen in the last year
or two, you might not consider that a correction, but a corrosion of your ability
to get out of your house. But to the chairman of the Fed, they're the same thing.
Housing slowdown could worsen
Bernanke observed that the problems in the subprime market, where lenders have
discovered newfound gumption to tell borrowers to save for a down payment and
improve their credit scores before getting a loan, could make the slowdown in
home sales even worse.
This leads an intrepid reporter to pose this query to a mortgage
broker: If there is less demand from borrowers for loans, does that
mean rates will go down? Supply and demand, right?
"I don't know
if the demand for mortgage money really drives interest rates," says Bob
Moulton, president of Americana Mortgage Group in Manhasset, N.Y. "I think
interest rates are sort of a function of the financial markets."
Fed
doesn't control mortgage rates
The Fed's actions don't directly affect
fixed-rate mortgages. But Moulton says he finds that perception out there. People
think mortgage rates will fall if the Fed cuts short-term rates. That's not necessarily
correct; the last time the Fed cut rates, in June 2003, the benchmark 30-year
rate rose more than half a percentage point in three weeks. Mind you, that was
after a Fed rate cut. Nevertheless, Moulton thinks that if the Fed does
cut rates this spring or summer, it would be good for his business, "only
because everyone seems to say, 'Bob, I hope the Fed drops rates a quarter point
because then I'll do something.'" Moulton tells them it doesn't matter:
"If you can get 6 percent money, that's very, very cheap." Keep
in mind that Bankrate's benchmark 30-year rate has averaged 6.45 percent in the
last 52 weeks. This week's benchmark rate is quite a bit lower than that.
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