Mortgage rates have continued to meander downward through this week, getting into the range of 4.25 percent to 4.5 percent on a 30-year fixed loan. This spread hasn’t been realized since the beginning of the month, so it shows how far the rates have dropped since their highs of 4.75 percent right after the Feds launched their mortgage-backed securities purchase-tapering language. The recent hearings with the Federal Reserve Chairman Ben Bernanke added another element of formula to the tapering, pegging the trigger on the rate of national unemployment when it reaches 6.5 percent, which gives the market watchers something else to look for in anticipating new economy changes.
Currently, the national unemployment rate is still above 7 percent. While there has been significant improvement, especially in areas and regions that realized 9 and 10 percent unemployment, a good number of folks are still out of work across the country. As such, the Feds have signaled a wait and see position based on how the average person is doing with the national recovery versus just the gross domestic product activity. That said, Bernanke couched the 6.5 percent trigger in such a way to give the Reserve room to wait even longer if they deem it necessary before pulling out purchasing support.
Because of the above, many lenders have been working in a wide range of lending on the 30-year fixed bellwether, with loans being issued from as low as 4.2 to as much as 4.9 percent in interest rates applied. Everyone is pretty comfortable with the conclusion that the mortgage-backed securities support is not going away this year, which was the main fear that would have skyrocketed rates in to the 5 or 6 percent range or higher.
So, to close out the week, the 30-year fixed rate is generally at 4.4 to 4.5 percent with opportunities for lower loans, depending on individual lenders. The 15-year counterpart is also eroding from 3.625 percent. The FHA/ Veteran’s Administration rate is still at 4.25 percent but may drop if the market goes lower. And the 5-year adjustable rate mortgage is at 3 to 3.25 percent.