How To See Beyond Rate Headlines

Posted by Leslie Bauer on Tuesday, March 9th, 2010 at 9:50pm.

Despite a rate uptick last Friday after a better than expected February jobs report, rates are holding to their sub-5% levels reached last week. To be specific: the market closed on Friday at 4.75% on a 30yr fixed for a single family home with at least 20% equity, a loan of $417k or less, points of 1%, and a borrower credit score of 740 or greater. Headlines can be misleading since rates vary based on property type, borrower profile, loan amount, and fees.

Also be aware that most press reports on rates are based on Freddie Mac’s weekly average nationwide rate survey which is published Thursdays. The report is for the rates on loans with parameters noted above, and headlines rarely mention average points for the average rates highlighted. So if you’re reading press reports, read long enough to see what the average points are. And if you want to go to the source, it’s available here:

As for current rates on all tiers from $417k to $2m, see below. These are also single family home scenarios, and they’re as of market close today. Rates change all day everyday as mortgage bonds trade.

We’re now in the home stretch of the Fed’s mortgage rate stimulus program that began January 1, 2009 and will end March 31, 2010. The Fed has been buying mortgage bonds all this time to drive bond prices up and yields (or rates) down. Rates dropped 1% at the inception of this program and have held that range. Here’s a more detailed piece I wrote last Friday on what might happen as we approach March 31 and beyond:
And we opened this week with markets continuing to digest jobs data.

CONFORMING RATES ($200,000 – $417,000) – 1 POINT
30 Year: 4.75% (4.87% APR)
FHA 30 Year: 4.875% (4.99% APR)
5/1 ARM: 3.375% (3.49% APR)

SUPER-CONFORMING RATES ($417,001 to $729,750 cap by county) – 1 POINT
30 Year: 5% (5.12% APR)
FHA 30 Year: 5% (5.14% APR)
5/1 ARM: 3.625% (3.74% APR)

JUMBO RATES ($729,751 – $2,00,000) – 1 POINT
30 Year: 5.625% (5.74% APR)
5/1 ARM: 4.625% (4.74% APR)

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