According to Freddie
The December 17, 2009 average 30 year fixed conforming mortgage quote is up again this week to 4.94% with 0.7% points according to Freddie Mac. Last week was 4.81% with 0.7% points, which was also up from the week before. For the past three weeks, the best mortgage rates have been climbing. They are still below 5% and still lower than the average of 5.19% this time last year. It remains a good time to refinance, but the window is slowly closing.
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Fixed income investors have been leading the way to higher purchase and refinance rates based on positive economic news (this causes fixed income investment prices to drop and yields, like mortgage rates, to increase). Retail sales are up, which is expected around the holidays, but was feared not to happen this year. Home prices continue to stabilize and even advance in certain areas. Inflation seems to be in check, according to the Federal Reserve. Unemployment numbers have been better than expected. And consumer sentiment, a leading economic indicator, is moving higher. Many can still save with a timely refinance but perhaps not for long.
Where Are Today's Mortgage Rates Likely Headed?
Although the Federal Reserve has repeatedly said that the fed funds rate should remain low for an extended period of time, ultimately, it is the sale of mortgage-backed securities (MBS) that determines if purchase and refinance rates go up or down. The overall monetary policy still calls for low interest rates because inflation is not yet a threat. But the sale of MBS will be the deciding factor in the price for mortgage money. As long as economic news remains positive, fixed income investments such as MBS will be less attractive to buyers causing yields to climb.