Here's a look at the state of interest rates on five common consumer banking products and the latest rates from
Bankrate.com's weekly national survey of large banks and thrifts conducted May 7, 2008.
Mortgages Rate: 6.13 percent (30-year fixed) Average Points: 0.40
Mortgage rates barely budged this week.
The average 30-year fixed-rate mortgage was down a mere 3 basis points, to 6.13 percent. A basis point is one-hundredth of a percentage point.
The average 15-year fixed -- a popular option for refinancing -- remained unchanged at 5.71 percent. The average jumbo 30-year
fixed also was unchanged at 7.35 percent.
The one-year adjustable-rate mortgage slipped 1 basis point, to 6.95 percent. The popular 5/1 ARM fell 9 basis points, to 5.87
percent.
Mortgage application activity rose after two weeks of significant decline. For the week ending May 2, activity rose a seasonally
adjusted 15.6 percent from a week earlier, according to the Mortgage Bankers Association.
Refinancing was up 19.3 percent. Applications for purchase rose 12.1 percent, with government-purchase loans (largely Federal
Housing Administration products) up a particularly robust 13.2 percent.
Meanwhile, the National Association of Realtors reported that pending home sales declined by 1 percent in March, to a reading
of 83. The indicator was down from an 83.8 reading in February and 20.1 percent lower than the 103.9 reading in March 2007.
Access to affordable mortgages is a problem in some areas of the country, and is hindering a recovery in the housing market,
according to an NAR statement. Home sales should continue to be soft for the next couple of months before improving over the summer, the NAR
predicts.
Home equity products Rates: 5.56 percent (line of credit); 7.74 percent (loan)
Rates on home equity products were split this week.
The average home equity line of credit -- or HELOC -- fell 19 basis points, to 5.56 percent. HELOCs have been falling steadily as a
result of the Federal Reserve's latest rate-cutting campaign.
Meanwhile, fixed-rate home equity loans rose 5 basis points, to 7.74 percent.
Although home equity products have been falling of late, fewer consumers are taking advantage of the opportunity to
borrow. Late last week, Freddie Mac reported a sharp downturn in the amount of equity cashed out by homeowners during the first
quarter of 2008.
Just 56 percent of homeowners with Freddie Mac-owned loans who refinanced their mortgages cashed out 5 percent or
more of their equity, according to the lender. That's the lowest cash-out refinance percentage since the second quarter of 2004.
Freddie Mac is a government-sponsored enterprise that buys mortgages from savings and loan associations, pools them
with other loans and sells the debt to investors.
It said tighter mortgage underwriting standards and falling home values were responsible for the decline in
equity activity.
Auto loans Rates: 7 percent (60-month, new car); 7.74 percent (36-month, used car)
Rates fell this week in the wake of the most recent move by the Federal Open Market Committee. The 60-month new-car loan rate tumbled 4 basis
points to land at exactly 7 percent. The 48-month new-car loan rate lost 4 basis points and is now 6.95 percent. The 36-month new-car loan
rate shed 3 basis points to come in at 6.89 percent.
Used-car loans also experienced a shake-up with the 48-month and the 36-month used car loan rate dropping 6 basis points to
7.81 percent and 7.74 percent, respectively.
Small cars and crossovers are selling like hot cakes in these days of steep gas prices -- at least compared to trucks. On
Friday, Katie Merx with the Detroit Free Press reported that April auto sales and overall light vehicle sales were down 6.9 percent from a
year ago. Typically relying on sales of large trucks, U.S. automakers General Motors, Ford and Chrysler all ended April with slumping sales
figures, but they have seen an increase in their sales of smaller vehicles.
Certificates of deposit Yields: 2 percent (1-year CD yield); 2.83 percent (5-year CD yield)
Another small dose of upside this week for CD rates as the one-year average yield rose 1 basis point to an even 2 percent, and the five-year
rose to 2.83 percent on a gain of 4 basis points. The jumbos also saw gains with the one-year now averaging 2.17 percent and the five-year at
2.96 percent with gains of 2 basis points and 6 basis points, respectively.
These gains, while certainly nothing to write home about, are interesting on the back of last week's Fed cut of 25 basis
points. The market is anticipating higher moves on the long end, but we shouldn't expect to see a lot in the way of gains on shorter-term
CDs until the Fed starts ratcheting up the short-term rates again. However, competition for customers and deposits is always an issue with
many banks, so look for institutions that are willing to pay far better than average rates
for your money.
Money market accounts gained 2 basis points this week and now pay an average of 0.66 percent. You don't have to settle for
that. Scout around for much better money market accounts in Bankrate's
high-yield database.
Credit cards Rates: 13.42 percent (standard fixed); 11.91 percent (standard variable)
The average purchase APR for variable-rate cards continues to beat fixed-rate cards. Down again this week, the interest rate for standard,
gold and platinum variable-rate cards sank 10 basis points to 11.52 percent, while fixed-rate cards kept to 11.89 percent. Among standard
cards, the rate disparity widened -- fixed-rate cards stood at 13.42 percent and variable-rate cards dropped 11 basis points to 11.91
percent.
Last week, the Federal Reserve, the U.S. Office of Thrift Supervision and the National Credit Union Administration approved
a proposal that would impose major reforms on the credit card industry. Among the slated changes, financial institutions would no longer have
the ability to apply rate increases to a cardholder's outstanding balance, or practice double-cycle billing, which means that consumers pay
interest on debt already repaid. Regulators aim to finalize the rules by the end of the year.
