Mortgage rates edge higher

As the deadline for the homebuyer tax credit approaches, mortgage rates are playing nice by remaining relatively unchanged at low levels.

The benchmark 30-year fixed-rate mortgage rose 1 basis point this week, to 5.22 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 0.42 discount and origination points. One year ago, the mortgage index was 5.23 percent; four weeks ago, it was 5.11 percent.

The benchmark 15-year fixed-rate mortgage fell 1 basis point, to 4.55 percent. The benchmark 5/1 adjustable-rate mortgage slid 6 basis points, to 4.42 percent.

Weekly national mortgage survey
Results of's April 21, 2010, 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:5.22%4.55%4.42%
Change from last week:+0.01-0.01-0.06
Monthly payment:$908.07$1,266.46$828.21
Change from last week:+$1.02-$0.84-$5.86

Homebuyer tax credits (up to $8,000 for first-time buyers and up to $6,500 for others) expire April 30. To qualify for the tax break, buyers have to have valid purchase contracts by the end of that day. They have to close the transactions by June 30. The tax credits were intended to stimulate home sales. The effect was muted.

"Purchase applications continued to increase coming out of the Easter holiday, as we approach the end of the homebuyer tax credit, and are up modestly over last month," says Michael Fratantoni, head of research and economics for the Mortgage Bankers Association, in the group's weekly mortgage survey.

According to Fratantoni, there was an accompanying modest bump in refinance applications, as "some borrowers took advantage of this recent rate volatility to lock in a low, fixed-rate loan."

Rate volatility means that rates jump up and down. Surveys, including Bankrate's, don't always catch volatility. When rates are volatile, they might fall an eighth of a percentage point at noon, then rise an eighth of a point in the afternoon. On a day like that, lenders set and reset rates three times. But if you looked only at rates at the beginning and end of the day, it might appear that rates were unchanged.

Mixed news on the street

With the tax credit about to end, and with flowers abloom, people in some areas are shopping for houses.

"From a street level, there's tons of activity," says Dan Green, a loan officer for Waterstone Mortgage in Cincinnati. "Last week we saw a tremendous amount of purchase activity. This week seems to be the same."

Green does much of his lending in the Cincinnati and Chicago areas. He says the homebuyer tax credits stimulated home sales last fall, which "has really freed up some of these move-up buyers" who are graduating from starter homes.

But things aren't looking so swell in Southern California, says Jeff Lazerson, president of Mortgage Grader, Laguna Niguel, Calif.

Sales depend upon employment, and "I don't know anybody out there who is not working harder for less money right now," he says.

High unemployment and low mortgage rates encourage borrowers to embrace caution. Just 6 percent of home loan applicants are applying for adjustable-rate mortgages, according to the MBA. That was down slightly from the previous week.


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