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Mortgage rates have moved little of late, though they have been rising fairly steadily on 30-yr and 15-yr fixed rate mortgages since mid-March. A potential leveling out could give some needed breathing room to consumers looking to buy a home.
The rates for 30-year fixed rate mortgages averaged 6.37% with 0.6 point, marginally higher than last week's average of 6.35% with 0.6 point, according to Freddie Mac's Primary Mortgage Market Survey.
Frank Nothaft, Freddie Mac's vice president and chief economist, pointed to mixed economic reports in the housing sectors as one reason for the stable rates. Nothaft cited reports that sales for existing homes fell more than expected in May. But he added that this news was offset by an increase in mortgage applications for the week ending July 4 that "was nearly 10% above the over five-year low set just two weeks prior, despite the holiday break."
Fixed rate loans consistently account for a large majority of mortgage applications, according to the Mortgage Bankers Association. (Adjustable rate mortgages accounted for only 10% of the overall application volume in the week ending July 4.) Thus, the rise in FRM rates since mid-March has translated into a serious hit to the wallets of consumers looking to buy a home.
Back on March 20 of this year, rates were down at 5.87% with 0.5 point for 30-year FRMs and 5.27% with 0.5 points for 15-year FRMs. The current rates represent increases of 0.5 and 0.64 percentage points, respectively. On a $200,000 30-year FRM mortgage, a 0.5 percentage point difference in interest rate translates into an extra $775.80 per year in payments. That adds up to over $23,274 in extra interest accrued over the life of the loan, assuming you don't make any prepayments.
For homeowners looking to refinance with a $150,000 15-year FRM, a 0.64 percentage point difference equates to a $613.32 increase in yearly payments and an extra $9,199.80 in interest paid over the 15-year life of the loan.
