Interest Rate Roundup for May 5, 2011

Interest Rate Roundup
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  • 4.88% (30-year fixed)
  • 0.35 (average points)

Here's a look at the state of mortgage rates from's weekly national survey of large banks and thrifts conducted May 4, 2011.

Mortgage rates in America saw a detectable decline in the last week, according to Bankrate's latest national survey, while a major lawsuit by the federal government accusing giant Deutsche Bank of defrauding the Federal Housing Administration showed the legal dust from the mortgage crisis is far from settled.

The Bankrate survey found the benchmark 30-year fixed-rate mortgage averaged 4.88 percent, off by 7 basis points from the previous week's 4.95 percent. A basis point is one-hundredth of 1 percentage point.

Meanwhile, the bellwether 15-year fixed-rate mortgage fell by 9 basis points, settling at 4.05 percent. With jumbo mortgages, or generally those for more than $417,000, 30-year fixed-rate mortgages averaged 5.36 percent, down 4 basis points.

Adjustable-rate mortgages took a sharper drop. The 5/1 ARM was 3.56 percent, a slump of 13 basis points. With a 5/1 ARM the rate is fixed for five years, then adjusted annually thereafter.

As the mortgage market has been roiled by gigantic losses in recent years, much of the cost has been borne by federal agencies that guarantee home loans.

This week, the U.S. government filed a major lawsuit to get some of the money back from Deutsche Bank, a major mortgage lender. The mortgages at issue were originated by a company called MortgageIT, a real estate investment trust Deutsche acquired in 2007.

The government's lawsuit said bad mortgages totaling more than $1 billion were guaranteed by the Federal Housing Administration. The government's lawsuit alleges Deutsche Bank lied about the quality of the home loans. The FHA says it discovered the alleged fraud in 2009.

Deutsche "cannot get away with lies and recklessness," Preet Bharara, the U.S. attorney for the Southern District of New York, where the case was filed, said at a press conference, as reported in The New York Times. Although such lawsuits by the government are relatively rare, Bharara suggested at his news conference that he is investigating other financial institutions as well, according to The Wall Street Journal.

Deutsche, however, countered that it is being wrongly accused. "We believe the claims against MortgageIT and Deutsche Bank are unreasonable and unfair, and we intend to defend against the action vigorously," the bank said in a statement.

Find out what your monthly mortgage payment could be using Bankrate's mortgage calculator.

-- Gregg Fields




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