Mortgage rates fall on tame inflation

Mortgage interest rates fell slightly this week, relieving homebuyers of the fear that last week's surprising jump might have launched an immediate upward trend, but leaving homeowners less enthusiastic about refinancing their existing loans.

Mortgage rates for Nov. 23, 2010

The benchmark 30-year fixed-rate mortgage fell 4 basis points this week, to 4.58 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 0.4 discount and origination points. One year ago, the mortgage index was 5 percent; four weeks ago, it was 4.51 percent.

The benchmark 15-year fixed-rate mortgage fell 5 basis points, to 3.97 percent. The benchmark 5/1 adjustable-rate mortgage fell 5 basis points, to 3.66 percent, and the benchmark 30-year, fixed-rate jumbo fell 6 basis points, to 5.18 percent.


Weekly national mortgage survey

Results of's Nov. 23, 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:4.58%3.97%3.66%
Change from last week:-0.04-0.05-0.05
Monthly payment:$843.89$1,218.01$755.74
Change from last week:-$3.95-$4.13-$4.66
What would the monthly payment be for you? Use Bankrate's mortgage calculator to find out.

CPI counteracts QE2

Fears of inflation appear to have backed off as a nearly flatlined Consumer Price Index followed the Federal Reserve's latest round of U.S. Treasury purchases, known as "quantitative easing." The core index (excluding food and fuel) showed that consumer prices were unchanged in October. That's below the consensus prediction, which was that the index would show an increase of 0.1 percent.

Signs of inflation tend to trigger a rise in rates while price stability has the opposite effect, explains Julie Miller, a sales manager at Prospect Mortgage in Irvine, Calif.

"The Consumer Price Index was positive for interest rates because it came in less than expected," she says. "It shows that inflation is very tame."

Miller's advice for borrowers is to lock their mortgage rate early, especially since her firm offers a rate roll-down feature.

"There is too much volatility in the markets to gamble with interest rates and their mortgage payment," she says.

Rate-chasers still fence-sitting

Don Frommeyer, senior vice president of Amtrust Mortgage Funding near Indianapolis, reports that this week's rates haven't hurt purchase-money loans, but the "little uptick has slowed a few refinances."

Borrowers' reluctance may not make sense, Frommeyer says, because those who still have loans at rates of 6 percent or higher can save money with today's rates. Some homeowners can't refinance due to appraisal, employment or credit issues, but others are simply waiting -- perhaps in vain -- for today's historically low rates to drop even lower.

"They are saying, 'When (rates) get into the threes, call me,'" Frommeyer says.

Rates, like gasoline prices, may creep up a little before and retreat a little after the Thanksgiving Day weekend, he says.

"Around here, every time we get a holiday, it seems to spark a little jump," he says. "I've advised my loan officers that when we get a Friday afternoon before a holiday, try to float because I think you will get a better rate afterward."

Use's mortgage calculator to figure out how much you can save with your next home loan.


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