NEW YORK, NY - Mortgage rates jumped sharply this week, with the average rate on the benchmark conforming 30-year fixed mortgage rate rising to 4.89 percent, according to Bankrate.com's weekly national survey. The average 30-year fixed mortgage has an average of 0.36 discount and origination points. The average 15-year fixed mortgage zoomed upward to 4.26 percent, and the larger jumbo 30-year fixed rate did as well, settling at 5.39 percent. Adjustable rate mortgages were mostly higher, with the average 5-year ARM climbing to 3.85 percent and the average 7-year ARM increasing to 4.22 percent.
Mortgage rates have been on a consistent upswing, rising in four of the five weeks since the Federal Reserve's early November announcement of $600 billion in additional bond purchases to stimulate the economy. But the movement kicked into overdrive this week with the tax cut extension expected to generate hundreds of billions more in government borrowing. Bond investors haven't responded kindly to the prospects of additional supply, with bond prices falling and bond yields rising. Mortgage rates are closely related to yields on long-term government bonds.
The last time mortgage rates were above 6 percent was Nov. 2008. At that time, the average rate was 6.33 percent, meaning a $200,000 loan would have carried a monthly payment of $1,241.86. With the average rate now 4.89 percent, the monthly payment for the same size loan would be $1,060.24, a savings of $181 per month for a homeowner refinancing now.
For a full analysis of this week's move in mortgage rates, go to: www.bankrate.com/mortgagerates.
The survey is complemented by Bankrate's weekly Rate Trend Index, in which a panel of mortgage experts predicts which way the rates are headed over the next seven days. In a landslide, 80 percent of the panelists are calling for continued increases in mortgage rates. Just 13 percent forecast a decline in mortgage rates, and the final 7 percent expect mortgage to remain more or less unchanged over the next week.
For the full mortgage Rate Trend Index, go to: www.bankrate.com/RTI.
The Bankrate network of companies includes Bankrate.com, Interest.com, Mortgage-calc.com, Nationwide Card Services, Savingforcollege.com, Fee Disclosure, InsureMe CreditCardGuide.com, Bankaholic, CreditCards.com and NetQuote. Each of these businesses helps consumers to make informed decisions about their personal finance matters. The company's flagship brand, Bankrate.com is a destination site of personal finance channels, including banking, investing, taxes, debt management and college finance. Bankrate.com is the leading aggregator of rates and other information on more than 300 financial products, including mortgages, credit cards, new and used auto loans, money market accounts and CDs, checking and ATM fees, home equity loans and online banking fees. Bankrate.com reviews more than 4,800 financial institutions in 575 markets in 50 states. Bankrate.com provides financial applications and information to a network of more than 75 partners, including Yahoo! (Nasdaq: YHOO), America Online (NYSE: AOL), The Wall Street Journal and The New York Times (NYSE: NYT). Bankrate.com's information is also distributed through more than 500 newspapers. Bankrate, Inc. was acquired by Apax Partners, one of the world's leading private equity investment groups, in September 2009. Apax operates across the United States, Europe and Asia and has more than 30 years of investing experience.