Mortgage Trends This Week: Dec. 21


While the weather outside is frightful, especially if you live on the East Coast, mortgage rates still remain relatively delightful — even with a slight uptick last week.

Both 15-and 30-year fixed-rate mortgage rates inched upward, as measured by’s Weekly Mortgage Rate Tracker. Fifteen-year rates rose for another week, to 4.51% from 4.47%, while 30-year mortgages increased to 5.1% from 5%.

One-year adjustable-rate mortgages turned the tables on the rest of the mortgage market, falling hard to 3.84% from 4.97%, while three-year ARMs remained level at 4.43%. Five-year ARMs climbed upward again to 4.43% from 4.26%.

There really isn’t anything dramatic that mortgage rate-watchers can point to for the northward veer in interest rates. The Federal Reserve did elect last week to keep interest rates where they are right now — at least until the U.S. economy shows more muscle.

One slightly disturbing piece of news came from the Federal Deposit Insurance Corp., which announced last week that its insurance fund (from which the FDIC pays the money to customers at failed banks) is basically underwater, to borrow a popular phrase these days.

According to the FDIC, the fund is in the red by $8.2 billion. The good news is that the bank insurance fund has $23 billion in reserves, and has another $45 billion coming from bank insurance payments. But still ...

Two pieces of news, one from the housing sector and one from the state-by-state unemployment numbers, point to an economy that really is on the mend.

Taking the latter theme first, the U.S. Commerce Department reported last week that new housing starts skyrocketed in November, rising by 8.9% — to 574,000 new units. That’s 47,000 more new units than we saw in October, and a welcome return to the 575,000 range that housing industry observers had been recording since last spring. No doubt some of that rise in housing starts was fueled by the imminent demise (at the time) of the $8,000 new homebuyer tax credit that was due to expire at the end of November. True, Congress did extend the tax credit, but homebuyers didn’t know that at the time — and new mortgage applications were way up in November as a result.

Another potential trigger for economic growth is some upbeat news in state-by-state unemployment. If more people are working, that would be big news for the economy, and would undoubtedly lead the Federal Reserve to commence lifting interest rates, and mortgage rates would rise as well.

For the first time in two years, more states saw a decrease in unemployment than an increase. Even high-unemployment states like New York and Michigan experienced a slight downgrade in unemployment, signaling that better times may indeed be on the way.

If there’s any overall theme this week, it’s the Fed’s decision to keep rates low — it virtually guarantees low mortgage rates throughout the end of the year, and likely at least a few months into 2010.

So, if you’re in the market for a new mortgage loan, make good use of the best search engine on the Web — You’ll find the best rates, and you’ll find them easily. Rates won’t be low forever, so take advantage while you can.

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

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