NEW YORK--(BUSINESS WIRE)--Dec. 12, 2002--After rising for the past three weeks, mortgage rates reversed direction and dropped sharply this week in response to the weak employment data released Dec. 6. The benchmark 30-year fixed-rate mortgage fell 16 basis points to 6.09 percent, with an average total of 0.46 discount and origination points, according to the Bankrate.com (OTCBB:RATE) national survey of large lenders. The 15-year fixed mortgage popular for refinancing dropped 15 basis points to 5.51 percent, and is now the lowest since the week of Nov. 13. One-year adjustable rate mortgages also moved lower by 4 basis points to 4.48 percent. A basis point is one-hundredth of 1 percentage point.
The disappointing employment data, a jump in the unemployment rate to 6.0 percent and a decline in nonfarm payrolls by 40,000, along with profit-taking in the stock market, had investors moving back into the safety of government bonds. Mortgage rates decline when yields for government and mortgage-backed bonds decline. Bond yields and prices move inverse to one another.
Despite positive economic data in the preceding two weeks, the disappointing employment report released Dec. 6 smacks of a still-anemic economy, said Bankrate senior financial analyst Greg McBride. Housecleaning of the Bush economic team aside, the mixed economic signals, plus the specter of war and terrorism, will keep rates rangebound for now.
One week can make a difference in what borrowers pay each month. Last week, with the average 30-year fixed mortgage rate at 6.25 percent, the monthly payment for a $150,000 loan was $923.58. With this week's drop in rates to 6.09 percent, the monthly payment for the same loan amount would be $908.02, a difference of $15.56 per month or nearly $5,600 over a 30-year term.
Bankrate's panel of mortgage experts don't see much chance that rates will go up sharply soon. Just 10 percent of the experts who voted in Bankrate's Rate Trend Index panel believe mortgage rates will rise over the next five weeks. The other 90 percent are split evenly between those who think rates will drop and those who predict that they will stay about the same (plus or minus 2 basis points).
|
Post News