Mortgage Trends This Week: Dec. 14


You have to hand it to the American consumer. Faced with a ravaged economy, millions of lost jobs and the potential descent of the U.S. as a global economic superpower, the Great American Consumer shrugs his or her shoulders, sees lemons and makes lemonade.

One good example can be found on the pages of Americans are trading down when it comes to public transportation, from planes, trains and taxi cabs to Ralph Kramden’s vehicle of choice – the bus. DePaul University’s Chaddick Institute for Metropolitan Development says that bus ridership increased by 8.1% from 2006 to 2007; and another 9.8% from 2007 to 2008.

But consumers won’t board the bus unless they can use their cell phones and iPod Touches, and bus companies are only too happy to comply. Greyhound has ramped up its bus technology to accommodate tech users, and now 30% of bus riders (according to Chaddick) are using Wi-Fi as they roll down the nation’s highways, streets and boulevards.

It’s that kind of resiliency that provides some hope for the U.S economy in general and the housing market in particular. When consumers make do and prove they can adjust to the new economic environment (providing they don’t have to give up everything), that’s when businesses will start hiring again, banks will begin lending again, and the housing market will pick up steam.

There’s a hint of that resiliency and measured optimism in last week’s mortgage rate numbers. For the first full week of December, mortgage rates finally began inching back up. Part of that, as recent weeks have shown, is that rates are so low that more Americans are jumping to refinance (and some even to buy new homes). But a bigger part of that is the gut instinct among consumers that the worst is over. There’s a new normal they’ve acknowledged, and it’s time to hitch our pants up and go about our lives as best we can.

After all, in the mortgage rate market, consumers are leaders and banks are followers.

And when there’s an appetite for new mortgages, banks and lenders feel like they can raise rates and still see some decent business walk through the door.

Lenders certainly must have felt that way last week, with 15- and 30-year fixed-rate mortgage rates rising, as measured by the’s Weekly Mortgage Rate Tracker. Fifteen-year rates shot up to 4.53% from 4.41%, while 30-year mortgages rose to 5.04% from 4.96%.

One-year adjustable-rate mortgages rose to 4.84% from 4.29%, while three-year ARMs jumped to 4.52% from 4.21%. Five-year ARMs also got a shot in the arm, bouncing to 4.3% from 4.21%.

We’re not saying that bus-ridership will dictate the direction of mortgage rates going forward. But if you’re looking for clues that things might be settling down, and life will once again return to normal, or what passes for normal in a lower-grade economic climate, think of that Great American Consumer swallowing his or her dignity and boarding that bus.

It could be a key for turning things around.

While you mull that over, continue to grab the best mortgage deals you can on While you may well be taking a bus home from work to your new house, it will be a good home, bought with a good mortgage rate.

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at

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