Mortgage rates stay at 3-month lows

Fed policies help fixed-rate, ARM borrowers

Mortgage rates were mostly unchanged from last week at three-month lows after the Federal Reserve said it would stretch out its purchases of mortgage-backed securities through the end of March.

The 30-year fixed-rate mortgage (FRM) averaged 5.04 percent with an average 0.6 point for the week ending Sept. 24, unchanged from a week ago and down from 6.09 percent a year ago, Freddie Mac said in releasing the results of its Primary Mortgage Market Survey.

The 15-year FRM this week averaged 4.46 percent with an average 0.6 point, an almost imperceptible change from 4.47 percent last week, but considerably lower than the 5.77 percent registered at this time a year ago.

Rates for 30-year fixed-rate loans bottomed at a record low of 4.78 percent in April, largely due to the Federal Reserve’s commitment to purchase up to $1.25 trillion in mortgage-backed securities issued by Fannie Mae, Freddie Mac and Ginnie Mae.

The Fed this week said it would extend those purchases through the end of March, rather than ending the program at the end of the year as planned (see story).

The Federal Open Market Committee also voted to keep its target for the federal funds overnight rate at between zero and 0.25 percent, and said economic conditions were "likely to warrant exceptionally low levels of the federal funds rate for an extended period."

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That would benefit borrowers with adjustable-rate mortgage (ARM) loans, because rates on those loans are typically tied to shorter-term rates, said Frank Nothaft, Freddie Mac’s vice president and chief economist, in a statement.

Five-year Treasury-indexed hybrid ARM loans averaged 4.51 percent this week, with an average 0.5 point, unchanged from last week and down from 6.02 percent a year ago, Freddie Mac said.

One-year Treasury-indexed ARM loans averaged 4.52 percent with an average 0.6 point, down from 4.58 percent a week ago and 5.03 percent a year ago.

The rates tracked by the survey are for borrowers with an 80 percent or lower loan-to-value ratio, taking out loans eligible for purchase by Freddie Mac. Borrowers making smaller down payments or seeking loans too large or risky for Freddie Mac can expect to pay more.

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