Mortgages up; refinances still attractive
Mortgage rates inched up after reaching a record low last week. But homeowners who want to refinance still have plenty of time to take advantage of the low rates, mortgage experts say.
30 year fixed rate mortgage – 3 month trend
The benchmark 30-year fixed-rate mortgage rose 1 basis point this week to 4.2 percent, according to the Bankrate.com 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 0.35 discount and origination points. One year ago, the mortgage index was 4.96 percent; four weeks ago, it was 4.23 percent.
At 4.2 percent, this is the second-lowest that the 30-year fixed has been in the 26-year history of Bankrate's weekly mortgage rate survey. The record of 4.19 percent was set Dec. 14.
The benchmark 15-year fixed-rate mortgage remained unchanged at 3.42 percent. The benchmark 5/1 adjustable-rate mortgage fell 3 basis points to 3.18 percent, and the 30-year fixed-rate jumbo mortgage fell 3 basis points to 4.66 percent.
Weekly national mortgage survey
Results of Bankrate.com's Dec. 21, 2011, weekly national survey of large lenders and the effect on monthly payments for a $165,000 loan:
Dan Green, a loan officer at Waterstone Mortgage in Cincinnati, says he expects rates to remain low until the debt crisis in Europe gets resolved. And that's not expected to happen overnight, analysts say.
"Mortgage rates should remain within a tight range until the eurozone works out its issues," Green says. "This is still a one-story market."
The European Central Bank recently announced measures to support the region's banking system, but investors fear the move will not be enough to contain the crisis.
Meanwhile, borrowers in the United States have kept lenders busy as homeowners try to lower their mortgage payments by refinancing with near record-low rates.
Brett Sinnott, director of secondary marketing at CMG Mortgage in San Ramon, Calif., says refinance activity has remained strong despite the holiday season, which is usually a slow time for mortgages.
"New origination seems to be increasing on our end as most of the existing pipeline has been or will be funding soon," he says. "And we are looking to have strong numbers in January 2012, especially when comparing figures from January of 2011."
Like Green, Sinnott also expects rates to remain low as we head into 2012. But borrowers shouldn't get too comfortable and think the low rates will last forever.
"At this point, even with a strong rally in stocks, I do not see rates rising too sharply," Sinnott says. "But unfortunately, any tick up in rates could cause a large slowdown as most borrowers have become accustomed to rates below 4 percent."