Mortgage Rates Jump for New Year’s

By Mike Colpitts

Mortgage rates, already at their record all-time lows jumped slightly higher in time for New Year’s this week as lenders became weary Rates about growing problems in international financial markets, according to Freddie Mac. The rate of a 30-year fixed rate loan rose to 3.95% from a record low 3.91% last week.

The 15-year fixed rate mortgage also moved up slightly to 3.24% from 3.21% a week ago. The 5-year Treasury indexed hybrid adjustable rate mortgage averaged 2.88% for the week, also rising from 2.85% a week ago. Last year all home borrowing rates were at least one-percent higher.

Mortgage interest rates on the benchmark 30-year fixed rate loan have been below 4% for nine straight weeks, demonstrating that banks and mortgage companies, which set borrowing rates want to attract more mortgage borrowers. However, restrictive mortgage underwriting requirements and higher credit scores are eliminating many potential borrowers from obtaining mortgages.


“Mortgage rates ended the year hovering near historic lows in an already affordable housing market,” said Freddie Mac chief economist Frank Nothaft.

A sluggish housing market triggered by lower home prices in many regions of the country is also hurting the mortgage market. However, borrowing rates for home mortgages are ending the year at historically low levels.

Cities in many areas of the U.S. are already experiencing better housing market conditions, especially in the farm-belt, where record high crop prices are leading to higher home values in Kansas, Iowa and Nebraska. The move towards higher home prices in at least 15 states cities are forecast by Housing Predictor to improve in 2012.

Rates are also being pressured by Treasury bond rates, which hovered around 1.92% in early morning sales on the 10-year security Thursday. Bond rates are closely tied to the direction of mortgage interest rates, and are regarded as a key indicator of the markets direction.