Interest Rate News

Benchmark mortgage rate at 4-year low.

For a while Wednesday morning, people were getting conforming mortgages at less than 5 percent.
Glenn Floyd, in Wilmington, N.C., grabbed a 30-year, fixed-rate mortgage at 4.875 percent, paying half a discount point. He describes his conversation with his broker Wednesday morning this way: "He said four, and I said, 'Lock,' before he finished saying seven-eighths."
The previous day, Floyd had been quoted a rate of 5.25 percent. It's a $312,000 loan, and he saved about $71 a month by waiting a day and getting the lower rate.
Across the country in California, Jeff Lazerson, president of online brokerage Mortgage Grader, was offering a conforming mortgage at 4.375 percent, with 1.125 discount points.
Has Lazerson ever seen mortgage rates that low? "No," he says. "Never. I'm starting on my 23rd year in the business. Never this low."

Rates didn't stay that low all day. By afternoon, they had gone up about a quarter of a percentage point. Dan Green, mortgage planner with the Mobium Group in Cincinnati, told his Twitter followers: "Today reminds us: The bird in the bush is ever-elusive. Lock mortgage rates when you have the chance."
There's reason to believe that borrowers will continue to have chances. The Federal Reserve made it clear Tuesday that it intends to push mortgage rates down and keep them low for a long time.
Bankrate's weekly rate survey didn't register as dramatic a decline in rates, for reasons that will be explained shortly. The benchmark 30-year fixed-rate mortgage fell 38 basis points, to 5.42 percent, according to the Bankrate.com national survey of large lenders. A basis point is one-hundredth of 1 percentage point. The mortgages in this week's survey had an average total of 0.39 discount and origination points. One year ago, the mortgage index was 6.21 percent; four weeks ago, it was 6.33 percent.
The benchmark 15-year fixed-rate mortgage fell 21 basis points, to 5.3 percent. The benchmark 5/1 adjustable-rate mortgage fell 33 basis points, to 5.84 percent.
Bankrate has been surveying mortgage rates weekly since 1985. For the benchmark 30-year mortgage, the all-time low was set June 11, 2003, at 5.28 percent. This week it's 5.42 percent. In 23 years of weekly Bankrate surveys, the benchmark rate has been below 5.42 percent eight times. The last time it was lower than 5.42 percent was March 17, 2004, when it was 5.41 percent.
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Volatile WednesdaysIn the last few months, it has been common for mortgage rates to have big up-and-down swings during the day -- a phenomenon known as volatility. In a random quirk, rates have been particularly volatile the last four Wednesdays, which happens to be the day when Bankrate conducts its weekly survey. Because of this volatility, Bankrate's survey didn't capture the depth of the week's rate decline.
This week's survey shows that it pays to shop around. In Dallas, some lenders told Bankrate that they were offering the 30-year fixed at 4.75 percent, and one thrift was offering it at 6.375 percent. In Los Angeles, Lazerson would disclose the lending source of his 4.375 percent loan only upon sworn assurance of strict secrecy.