Mortgage Rates Continue See-Saw - Average 30 Year Drops Below 5%

The average rate on a 30-year fixed rate mortgage continued to see-saw around the 5% range, dropping by 8 basis points from 5.05% to 4.97% after rising 12 basis points last week (a basis point is one one hundredth of a percent). The BestCashCow averages also dropped, with the average 30-year fixed rate mortgage moving from 5.042% to 5.015%.

Averages though won't get you a mortgage and I like to check and see what rate is actually available. Since I live in Massachusetts I checked Massachusetts mortgage rates. Below I compared the best rate I could find on a $200,000 30-year fixed rate mortgage with 0 points:

This Week Last Week

Rate: 4.750% 4.750%

Points: 0 0

Fees: $1,995 $1,995

AimLoan.com continues to offer the best 30-year fixed rate mortgage in Massachusetts according to the BestCashCow rate tables at 4.750%. It has remained at this rate for 5 out of the last 6 weeks.

The 15-year FRM this week averaged 4.33 percent, down from last week when it averaged 4.40 percent. The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.11 versus last week's 4.16 percent. The 1-year Treasury-indexed ARM rose significantly again from 4.16% to 4.27%.

Here's what Freddie Mac had to say about the rate situation:

"30-year fixed mortgages fell below 5 percent to match levels seen two weeks ago and are helping to maintain affordable home-purchase conditions," said Frank Nothaft, Freddie Mac vice president and chief economist. "In fact, monthly principal and interest mortgage payments for a typical family buying a median-priced home of $163,800 were just $709 in January, the lowest amount since February 1998, according to the National Association of Realtors® . For first-time homebuyers, the fourth quarter of 2009 was the third most affordable quarter since 1981 behind the first and second quarter of 2009."

Mortgage rates remain in a tight range. As the chart shows, they've gone mostly sidways since September of 2009. Many analysts are predicting rates will rise, but weak economic data as well as testimony from Fed Chairman Bernanke show the economy is still far from recovered. Even with the Fed ending its purchase of MBS, it's possible rates may stay well below 6% for some time.

The rates above are just averages. Use the BestCashCow rate tables to find the best mortgage rates in your area.