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Mortgage Rates Inch Slightly Higher According to Bankrate.com Weekly National Survey

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NEW YORK, NY – Mortgage rates were slightly higher this week with the benchmark 30-year fixed mortgage rate inching to 3.69 percent, according to Bankrate.com’s weekly national survey. The 30-year fixed mortgage has an average of 0.23 discount and origination points.

The larger jumbo 30-year fixed rose to 3.74 percent, while the average 15-year fixed mortgage rate climbed to 2.96 percent. Adjustable mortgage rates increased this week as well, with the 5-year ARM moving up to 3.14 percent and the 7-year ARM jumping to 3.32 percent.    

With inflation finally on the rise, mortgage rates went higher for the fourth time in the past five weeks. The benchmark 30-year fixed mortgage rate hit the highest level since mid-June, erasing the Brexit-induced decline that lasted all summer and much of the fall. Even though the Federal Reserve held off on raising interest rates, they pointed to increased inflation and inflation expectations, which are the factors that have been pushing bond yields and mortgage rates higher. Inflation is the worst enemy of a long-term bond investor as it erodes the value of the fixed payments the investor receives. Mortgage rates are closely related to long-term government bond yields because mortgages are often packaged together and sold as bonds. With uncertainty about the election gripping financial markets, the course financial markets take in the coming days will depend on how events in an already wacky election unfold.

At the current average 30-year fixed mortgage rate of 3.69 percent, the monthly payment for a $200,000 loan is $950.22.

SURVEY RESULTS                                                                                                             

30-year fixed: 3.69% — up from 3.64% last week (avg. points: 0.23)
15-year fixed: 2.96% — up from 2.93% last week (avg. points: 0.19)
5/1 ARM: 3.14% — up from 3.11% last week (avg. points: 0.26)

Bankrate’s national weekly mortgage survey is conducted each Wednesday from data provided by the top 10 banks and thrifts in 10 top markets.

For a full analysis of this week’s go in mortgage rates, go to www.bankrate.com

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. The majority of panelists – 60 percent – expect mortgage rates to remain more or less unchanged over the next week.  The remaining respondents are mixed with 20 percent predicting a rise in mortgage rates and 20 percent forecasting a decline over the next seven days.

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Non-banks dominate the low down payment mortgage market

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(RECAP: Nearly a decade after the housing crisis, the mortgage market has evolved in unexpected ways, with nontraditional financiers increasingly backing ever-more leveraged loans. Those mortgages, while underwritten to pristine standards, come with smaller down payments. And it’s non-banks, also known as “mortgage bankers,” that are making the most low down payment mortgages. Either development could be a concern. In general, homeowners with less equity staked in their homes have less incentive to try to keep them if something goes incorrect. And while nonbanks like Quicken and Nationstar underwrite to the same strict standards the banks do, their business model could place them at a disadvantage in a downturn.)

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SoFi and Fannie Mae announce cash-out refi for student loans

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(RECAP: Capitalizing off of its start as a student lender, SoFi and government-sponsored enterprise Fannie Mae announced a new loan option on Wednesday that allows homeowners to refinance their mortgage at a lower rate and pay down the balance of an existing student loan. Under the new loan option, which is titled the Student Loan Payoff ReFi, SoFi stated it will pay down the student loan by disbursing payment directly to the servicer of the student debt. “People can pay off student loan debt and are left with one loan at the low rates that mortgage borrowers are enjoying in today’s market,” said Michael Tannenbaum, senior vice president of mortgage at SoFi. Typically, he said, student loans have a much higher rate than mortgages, making it better for borrowers to have more mortgage debt and pay off their student loans. For the initial starting period, the loan option is exclusive to SoFi.)

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