Mortgage Rates at Highest Level in 3 Months - Average 30 Year Above 5%

Average 30-year fixed mortgage rates rose above 5% last week, moving up 9 basis points from 4.99% to 5.08% according to the Freddie Mac Primary Mortgage Survey. That's the highest rate since December 31, 2009 when rates stood at 5.14%. The BestCashCow mortgage averages showed the same trend with the 30-year moving from 4.95% to 5.04%. This is not the first time that rates have moved above 5% over the last couple of months, as the chart below shows but what is different this time is the end of the Fed's purchase of mortgage backed securities on March 31 as well as a rise in Treasury Bonds. Most analysts expect that rates will move up modestly (by 20-50 basis points) and I explore this a bit in an earlier article entitled: Will Mortgage Rates Rise When the Fed MBS Program Ends?

We'll see what happens to rates over the next couple of weeks as the market begins to digest the lack of the Fed in the mortgage market and a recovering economy.

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: 5.000% 4.875%

Points: 0 0

Fees: $1,995 $1,995

The best mortgage rate I could find is now 5%, up from 4.875% the week before and 4.725% two weeks ago. Best rates, at least in my area, have now moved up 25 basis points. This is the first significant increase in actual rates that we've seen in the last four months. Rates do seem to be on the rise.

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Other mortgage averages also showed movement. The 15-year FRM only moved from 4.34% to 4.39%, the 5-year ARM dropped from 4.14% to 4.10%. The volatile 1-year Treasury-indexed ARM dropped from 4.20% to 4.05%.

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

“Interest rates for fixed mortgages rose this week following a run up in long-term bond yields, while ARM rates eased slightly,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Rates on 30-year fixed loans were the highest since the starting week of this year.

“Home-price declines continue to moderate with more metropolitan areas showing stabilizing or rising values. Compared with one year ago, house prices were down 0.7 percent in January 2010 in the S&P/Case-Shiller® 20-City Composite Index, which was the smallest 12-month decrease since January 2007. Nine of the cities experienced positive growth, led by San Francisco’s 9.1 percent annual gain. Recently, the Mortgage Insurance Companies of America reported that homeowners who moved out of default outnumbered those who became newly delinquent in February, which was the first such occurrence since March 2006.”

Use the BestCashCow rate tables to find the best mortgage rates in your area.