Interest Rate Roundup Oct. 30, 2008

Mortgages

Mortgage rates continued their seesaw ride, surging for the second time in three weeks.

The average 30-year fixed-rate rose 45 basis points, to 6.77 percent. A basis point is one-hundredth of a percentage point.

Last week, the 30-year fixed plunged 42 basis points -- that sharp decline coming just seven days after the 30-year fixed recorded its biggest weekly rise in the Bankrate.com index in more than 21 years. A basis point is one-hundredth of a percentage point.

In other mortgage rate news for this week, the average 15-year fixed -- a popular option for refinancing -- jumped a whopping 53 basis points, to 6.46 percent. The average jumbo 30-year fixed lept 30 basis points, to 7.95 percent.

The one-year adjustable-rate mortgage actually fell 5 basis points, to 6.09 percent. On the other hand, the popular 5/1 ARM rose 18 basis points, to 6.67 percent.

Mortgage activity rose for the third time in the past four weeks, according to the Mortgage Bankers Association.

For the week ending Oct. 24, mortgage activity rose a seasonally adjusted 16.6 percent. The week previous it fell the same 16.6 percent. Refinancing activity increased by 28.5 percent, while applications for new purchase grew by 8.5 percent.

Meanwhile, a pair of reports offered rare glimmers of hope for the beleaguered housing market.

Sales of existing homes rose by 1.4 percent in September when compared to the same time period a year ago, according to the National Association of Realtors.

In addition, sales of newly constructed homes grew by 2.7 percent in September when compared to August, according to the U.S. Census Bureau.
-- Chris Kissell

CDs

Another week of very slight erosion in CD yields. There's still considerable flight to safety as the stock market gyrations continue. Bank CDs are benefiting from that fear and that may keep downside pressure on CDs for the time being.

This isn't to hazard a guess as to when the stock market may bottom, but there does appear to be some bottom-fishing taking place. An awful lot of money is sitting on the sidelines waiting to be reinvested, and as that money comes back into the market we should see CD yields start to show some life again.

As expected, the Fed has cut the federal funds rate again. Eventually, short-term rates will be so low and so unattractive that people will be willing to risk buying equities once more.

So, here are this week's numbers. The average one-year CD now yields 2.68 percent, a drop of 2 basis points; the five-year fell 1 basis point to 3.45 percent. The one-year jumbo shed 1 basis point to come in at 2.87 percent. And the five-year jumbo stands at 3.54 percent after losing 1 basis point. A basis point is one-hundredth of a percentage point.

Money market account yields rose again this week; up 1 basis point to an average of 0.76 percent.

For the best deals visit Bankrate's high-yield database for CDs or  money market accounts.
-- Laura Bruce

Auto loans

Auto loan interest rates are up slightly in this week's rate survey. The 36-month new car loan bumped up 2 basis points to 7.15 percent. Also up 2 basis points, the 48-month new-car loan is 7.2 percent and the 60-month new-car loan gained 1 basis point to 7.23 percent.

In used car loans, the 36-month loan rate is up 1 basis point to 7.91 percent and the 48-month used-car loan stayed put at last week's rate of 7.93 percent. A basis point is one-hundredth of a percentage point.

A bailout for automakers could be on the way. According to Edmund Andrews and Bill Vlasic, reporting for The New York Times on Monday, the White House is exploring options to help the struggling American carmakers, including tapping a $25 billion loan program created by Congress to help modernize car plants or using the new authority of the Treasury Department granted by the $700 billion bank bailout program.
-- Sheyna Steiner

Home equity products

Rates on home equity products were split this week.

The average home equity line of credit -- or HELOC -- fell 2 basis points, to 5.48 percent.

HELOC borrowing costs should continue to fall in coming weeks now that the Federal Reserve Open Market Committee cut the target federal funds rate by 50 basis points on Oct. 29. A basis point is one-hundredth of a percentage point.

Most home equity lines of credit are indexed to the prime rate, a common benchmark for consumer and business loans set by banks. The prime rate moves in lock step with the federal funds rate.

Meanwhile, home equity loan rates rose 6 basis points, to 7.95 percent. Loan rates are not directly tied to Federal Reserve rate decisions, so it remains to be seen whether they will rise or fall in coming weeks. 
-- Chris Kissell

Credit Cards

ariable-interest rates slid down slightly  this week. The average purchase rate on fixed-rate standard cards kept to 13.42 percent and on variable-rate cards, fell 3 basis points to 11.68 percent.

On fixed-rate standard, gold and platinum cards, the average APR remained at 12 percent but for variable-rate cards, came down 4 basis points to 11.33 percent. A basis point is one-hundredth of a percentage point.

A study released by marketing research company comScore this week declared that online applications at the top 10 credit card issuers dropped for the first time in the last five consecutive quarters. Compared to the second quarter of 2007, Q2 of 2008 saw a decrease in the volume of card applications by 6 percent.
-- Leslie McFadden