Bankrate: Mortgage Rates Dip Below 5 Percent

December 23, 2010

NEW YORK, N.Y. – December 23, 2010 – (RealEstateRama) — Mortgage rates pulled back slightly this week, with the average rate on the benchmark conforming 30-year fixed mortgage rate receding to 4.96 percent, according to Bankrate.com’s weekly national survey. The average 30-year fixed mortgage has an average of 0.46 discount and origination points.

To see mortgage rates in your area, go to http://www.bankrate.com/funnel/mortgages/.

The average 15-year fixed mortgage retreated to 4.29 percent, while the larger jumbo 30-year fixed rate bucked the trend, inching higher to 5.59 percent. Adjustable rate mortgages were broadly lower, with the average 5-year ARM falling to 3.92 percent and the average 7-year ARM slipping to 4.35 percent.

After showing an almost meteoric rise in the preceding six weeks, mortgage rates pulled back slightly this week, falling below the 5 percent threshold. Investors – including the biggest investor of them all, the Federal Reserve – swooped in and picked up government bonds in the wake of the recent selloff, driving bond yields and mortgage rates lower. Mortgage rates are closely related to yields on long-term government bonds. Mortgage rates will likely hopscotch back and forth over the 5 percent mark in early 2011, but continued economic improvement will see mortgage rates trending higher as the year unfolds.

The last time mortgage rates were above 6 percent was Nov. 2008. At that time, the average rate was 6.33 percent, meaning a $200,000 loan would have carried a monthly payment of $1,241.86. With the average rate now 4.96 percent, the monthly payment for the same size loan would be $1,068.76, a savings of $173 per month for a homeowner refinancing now.

SURVEY RESULTS

30-year fixed: 4.96% — down from 5.00% last week (avg. points: 0.46)
15-year fixed: 4.29% — down from 4.37% last week (avg. points: 0.4)
5/1 ARM: 3.92% — down from 3.95% last week (avg. points: 0.41)

Bankrate’s national weekly mortgage survey is conducted each Wednesday from data provided by the top 10 banks and thrifts in the top 10 markets.

For a full analysis of this week’s move in mortgage rates, go to http://www.bankrate.com/mortgagerates.

The survey is complemented by Bankrate’s weekly Rate Trend Index, in which a panel of mortgage experts predicts which way the rates are headed over the next seven days. Half of the panelists predict mortgage rates will be more or less unchanged over the coming week. The others are split, with 30 percent expecting an increase and the remaining 20 percent predicting a decline in mortgage rates over the next seven days.

For the full mortgage Rate Trend Index, go to http://www.bankrate.com/RTI.

About Bankrate, Inc.

The Bankrate network of companies includes Bankrate.com, Interest.com, Mortgage-calc.com, Nationwide Card Services, Savingforcollege.com, Fee Disclosure, InsureMe CreditCardGuide.com, Bankaholic, CreditCards.com and NetQuote. Each of these businesses helps consumers to make informed decisions about their personal finance matters. The company’s flagship brand, Bankrate.com is a destination site of personal finance channels, including banking, investing, taxes, debt management and college finance. Bankrate.com is the leading aggregator of rates and other information on more than 300 financial products, including mortgages, credit cards, new and used auto loans, money market accounts and CDs, checking and ATM fees, home equity loans and online banking fees. Bankrate.com reviews more than 4,800 financial institutions in 575 markets in 50 states. Bankrate.com provides financial applications and information to a network of more than 75 partners, including Yahoo! (Nasdaq: YHOO), America Online (NYSE: AOL), The Wall Street Journal and The New York Times (NYSE: NYT). Bankrate.com’s information is also distributed through more than 500 newspapers. Bankrate, Inc. was acquired by Apax Partners, one of the world’s leading private equity investment groups, in September 2009. Apax operates across the United States, Europe and Asia and has more than 30 years of investing experience. For more information on Apax, visit: www.Apax.com.