Mortgage Rates Hold Steady This Week

Mortgage interest for the week held fairly close to the previous week's rates, reports Freddie Mac.

Average interest on 30-year fixed loans slipped a notch to 4.98 percent from 4.99 percent and was down from 5.10 percent a year ago.

Here's how other rates fared for the week:
15-year fixed loans dropped down to 4.39 percent from 4.40 percent.
Five-year adjustable-rate mortgages dipped to 4.25 percent from 4.27 percent.
One-year ARMs came down to 4.29 percent from 4.32 percent.

While still higher than the historic lower of 4.71 percent established in early December, long-term mortgage rates have hovered around a very favorable 5 percent thanks to the Federal Reserve's mortgage-backed securities program meant to keep rates low and make home buying more affordable.

The central bank's policymaking committee confirmed on Jan. 27 that it will keep rates near those record lows in order to prop up the economy; but it still plans to terminate the program at the end of March.

Low rates also trigger more refinancing activity, according to Freddie Mac. In the 2009 fourth quarter, it said, about a third of borrowers who refinanced a home loan -- the highest share since at least 1985 -- opted to slash their principal balance rather than tap into their equity.

As a result, only around $11 billion in home equity -- the smallest quarterly volume in about nine years -- was tapped by consumers who refinanced a conventional, prime mortgage.

Source: Memphis Daily News (01/29/10)