Mortgage Rates Flat - 30 Year Hovering Near 5%

The average rate on a 30-year fixed mortgage rose for the first time in four weeks, moving from 4.98% to 5.01% according to data from Freddie Mac. This differs from the BestCashCow rate tables, which show average 30-year mortgage rates dropping slightly from 5.068% to 5.017%. This divergence from two different sources indicates a flat or undecided market. Mortgage rates have vaccilated around the 5% range for the last three weeks.

Averages though aren't mortgages 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 $1,594

AimLoan.com continues to hold the lowest rate at 4.750% and 0 points. So, in practical purposes, rates have not moved much in the last month.

The 15-year FRM this week averaged 4.40 percent up from from last week when it averaged 4.39 percent. The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.27 versus last week's 4.25 percent. The 1-year Treasury-indexed ARM dropped from bit from 4.29% to 4.22%.

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

“Mortgage rates remained relatively stable for a second week amid news of a strengthening housing market," said Frank Nothaft, Freddie Mac vice president and chief economist. “Residential fixed investment rose for two consecutive quarters over the last half of 2009 following a steady quarterly decline since the beginning of 2006. Pending existing home sales rebounded by 1 percent in December from a record drop in November that was due in part to the original expiration of the homebuyer tax credit, according the National Association of Realtors® . More recently mortgage applications for home purchases jumped 10 percent at the end of January, according to figures from the Mortgage Bankers Association .”

“Even more encouraging news came from the Federal Reserve’s Senior Loan Officer Opinion Survey , which reported that banks have generally stopped tightening standards on most types of loans in the fourth quarter of 2009, with commercial real estate as the exception. However, banks have yet to unwind the tightening that occurred over the last two years. Moreover, substantially fewer banks expected credit quality to deteriorate over the coming year.”

The real question though is whether the housing market has stabilized. In an article entitled 'Housing Recovery'? Strategic Defaults Tell a Different Story surlytrader shows some compelling data that the housing market is in tough shape and getting tougher. I also wrote about how low interest rates could be a trap for first-time homebuyers in an article entitled Is It A Good Time to Buy a House When Interest Rates Are Low?

If you're going to buy a home, do it realizing that home prices could still fall further. Negotiate hard, get the best possible rate, and be comfortable with the possibility of staying in your house for some time.

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