Rates Rise Into 2010

Written by: Steve Cook   Thu, December 31, 2009 Beyond Today’s News, Market Trends


Mortgage rates on 30-year fixed-rate mortgages ended 2009 with the longest ascending streak of the year, rising for the fifth straight week to an average  of 5.14 percent for the week ending December 31, 2009, up from last week when it averaged 5.05 percent.  Last year at this time, the 30-year FRM averaged 5.10 percent. 

The 15-year FRM this week averaged 4.54 percent with an average 0.7 point, up from last week when it averaged 4.45 percent.  A year ago at this time, the 15-year FRM averaged 4.83 percent. 

The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.44 percent this week, with an average 0.6 point, up from last week when it averaged 4.40 percent.  A year ago, the 5-year ARM averaged 5.57 percent. 

“Although long-term mortgage rates rose for the fourth week in a row, they still remain affordable by historical standards,” said Frank Nothaft, Freddie Mac vice president and chief economist.  “Based on today’s median loan amount of $138,000, monthly principal and interest payments for a 30-year fixed-rate mortgage are close to one-third less than a decade ago when rates peaked at 8.6 percent in May 2000. This translates into almost 50 percent less in interest payments over the full 30-year term.

Bankrate reported the benchmark 30-year fixed-rate mortgage rose 9 basis points this week, to 5.33 percent.  A basis point is one-hundredth of 1 percentage point. The mortgages in this week’s survey had an average total of 0.46 discount and origination points. One year ago, the mortgage index was 5.64 percent; four weeks ago, it was 4.01 percent.

For all of 2009, the average rate on the 30-year fixed was 5.38 percent, the lowest it has been in the 24-year history of Bankrate’s weekly survey. The last year in which rates were consistently lower was probably 1956. According to monthly data from the National Bureau of Economic Research, rates on FHA mortgages averaged about 4.85 percent in 1956.

In 2009, the average rate on the 30-year topped out at 5.95 percent at the end of June. It reached a record low (in Bankrate’s survey) of 5 percent the week of Thanksgiving.

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