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Average Fixed Mortgage Rates, the Calm Before the Storm

Average Fixed Mortgage Rates, the Calm Before the Storm

After running much higher for most of the past several months, fixed average mortgage rates are holding steady at current levels. Mortgage rates today on 30 year conventional home loans are averaging 4.52 percent, up slightly from last week's average rate of 4.45 percent. Current mortgage rates are much higher from levels just a few months ago because 10 year bond yields are much higher.

Concern Federal Reserve Will Stop QE3

There has been growing concern among investors that the Federal Reserve will curtail or even stop their purchases of bonds and mortgage-backed securities. The Federal Open Market Committee (FOMC) is scheduled to meet in September and investors are scared the Fed will announce their policy change right after the meeting.

If the Fed does announce an end to buying long term bonds and mortgage-backed securities, both bond yields and mortgage rates will soar even higher from current levels. Concern of the buying ending has already sent long term bond yields much higher since the beginning of May. The low point for 10 bond yields in early May was at 1.62 percent, today 10 year bond yields are up another 8 basis points to 2.84 percent.

30 Year Conforming Mortgage Rates

Average Fixed Mortgage Rates The Calm Before the Storm10 year bond yields almost doubled during this time and 30 year conforming mortgage rates moved 100 basis points higher. The recent increase in mortgage rates would have been more pronounced if rates were allowed to fall even further. Lenders didn't lower rates as much as they should have which is why bond yields are up 1.25 percent while 30 year mortgage rates are up only 100 basis points.

If this scenario plays out we could see average 30 year mortgage rates move above 5.00 percent in 2013 which would surprise everyone. Earlier this year most analysts were expecting the high point for 30 year rates at 4.50 percent. Since rates are already above 4.50 percent we could expect 30 year rates to move as high as 5.00 percent sometime before October.

Current Mortgage Rates on 15 Year Conventional Loans

Current mortgage rates on 15 year conventional home loans are averaging 3.49 percent, an increase from last week's average 15 year mortgage rate of 3.35 percent. The lowest point I saw lenders quoting 15 year refinance rates was at 2.25 percent with 2 mortgage points. This rate and point combination I saw was earlier this year. The lowest 15 year refinance rates today with 2 points are at 3.00 percent.

Average Jumbo Mortgage Rates Today

Today's mortgage rates on 30 year jumbo loans are averaging 4.68 percent, up from the previous week's average 30 year jumbo mortgage rate of 4.59 percent. If the Fed stops their current round of buying, AKA "Quantative Easing (QE3), 30 year bond yields will also move higher and average rates will move above 5.00 percent.

Currently, the lowest 30 year jumbo rates quoted by lenders are way below 5.00 percent. The lowest 30 year jumbo refinancing rate in our database for the state of California are quoted at 4.00 percent with 2.00 points. The lowest 30 year jumbo refi rates in Washingont D.C. are quoted slight higher at 4.25 percent with 1.605 points.

15 year jumbo mortgage interest rates are averaging 4.02 percent, up from the prior week's average 15 year jumbo rate of 3.95 percent. This coming week average 15 year jumbo rates will move above 4.10 percent and possibly as high as 4.15 percent. If the Fed stops QE3 average 15 year jumbo rates will move above 4.50 percent to around 4.75 percent.

The lowest 15 year jumbo mortgage rates today in our database for the state of Texas are at 3.625 percent with 0.875 mortgage points. The lowest Texas jumbo mortgage rates without points are at 3.75 percent. In the state of New Jersey the lowest 15 year rates are quoted at 3.50 percent with 1.125 points and the lowest rate without points are quoted at 3.625 percent.


Author: Brian McKay
August 20th, 2013