Mortgage rates climb

Mortgage rates crept higher this week.

The benchmark 30-year fixed-rate mortgage climbed 4 basis points this week, to 5.15 percent, according to the 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 0.45 discount and origination points. One year ago, the mortgage index was 5.41 percent; four weeks ago, it was 5.13 percent.

The benchmark 15-year fixed-rate mortgage edged up 1 basis points, to 4.52 percent. The benchmark 5/1 adjustable-rate mortgage rose 2 basis points, to 4.53 percent.

Weekly national mortgage survey
Results of's Feb. 24, 2009, weekly national survey of large lenders and the effect on monthly payments for a $165,000 loan:
30-year fixed15-year fixed5-year ARM
This week's rate:5.15%4.52%4.53%
Change from last week:+0.04+0.01+0.02
Monthly payment:$900.94$1,263.93$838.97
Change from last week:+$4.06+$0.85+$1.96

Buyers vs. sellers

Home sellers and buyers have just two months -- until April 30 -- to agree to a deal if they want to qualify for the federal homebuyer tax credit. As the calendar creeps closer to that fateful day, who will be in the catbird seat: buyers or sellers?

Jim Sahnger, a mortgage consultant for Palm Beach Financial Network in Stuart, Fla., says an abundance of housing stock tips the scales toward buyers. "Buyers should gain the advantage," he says.

David Kuiper, a mortgage planner at First Place Bank in Holland, Mich., also believes excess home supply strengthens the hand of buyers, at least in his market. "Sellers really aren't in a position to negotiate," he says. "Buyers will simply move along to the next home."

However, he concedes, other markets may have stabilized enough that he can imagine "some of the advantage shifting to sellers" as shoppers feel pressure to purchase before the deadline.

Jeff Lazerson doesn't believe either side has an edge. "I think it's a neutral situation," says Lazerson, president of Mortgage Grader, a mortgage broker based in Laguna Niguel, Calif. "We have such a logger jam in the system now, with just trying to get a loan into the system and out the other end.

"I don't see anybody having an advantage in this situation because the system is still on life support."

Forget foreclosures

Meanwhile, homebuyers hoping to qualify for the tax credit -- up to $8,000 for first-time buyers and $6,500 for move-up buyers -- should forget about purchasing a short sale or foreclosure on the cheap, Sahnger says. It takes time to close on the sale of a distressed property, making it difficult to meet two important tax credit deadlines -- April 30 (for having a home under contract) and June 30 (for closing the transaction).

Sahnger says it may be possible to wrap up a short sale before the deadlines if the seller has been preapproved for sale at a certain price and the buyer agrees to act fast. But such success stories are likely to be rare, he says.

"Buyers should stay away from short sales right now," he says. "The time required to get all the negotiations in is quickly waning."

Lazerson agrees: "The foreclosures and short sales -- those are taking months and months to get a resolution."

Instead, Lazerson urges shoppers to focus on finding "clean inventory," homes unattached to a short sale or foreclosure process. "The clean inventory is the stuff everyone wants now because those transactions can happen pretty quickly," he says.

In today's market, finding such a property may be a challenge. "There's not a lot of clean inventory out there right now," Lazerson says.

To increase the odds of success, Sahnger urges buyers to work with a real estate agent who will "show them properties only where there is a likelihood of getting a deal done."

"This is not a time to be working with an agent that does not know the landscape," Sahnger says.

Summertime blues?

The window of opportunity also may be closing fast for sellers, Sahnger says.

Once the credit expires, he says, the housing market could experience "a real hangover" of soft sales that mirrors the slide in auto sales following last fall's Cash for Clunkers program.

"Anyone that sits on their hands thinking they are in control as a seller could end up woefully disappointed this summer," he says.

However, Lazerson believes buyers and sellers may get a reprieve this summer. He thinks chances are good Congress will either extend the homebuyer tax credit again or try something else to boost home sales.

"The guys sitting in office right now, they don't want to get thrown out," he says. "There's going to be some other subsidy or stimulus to keep that whole thing going."

If you're in the market for a mortgage or refinance, you can look for the best interest rate by searching Bankrate's rate tables.


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Claes Bell

Mortgage rates in Los Angeles

See this week's average rates for the 30-year fixed-rate mortgage, 15-year fixed-rate mortgage, 5/1 ARM and 30-year jumbo mortgage in Los Angeles.  ... Read more


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