The first week the Federal Reserve was no longer buying mortgage-backed securities interest rates increase to 5.32% from 5.08% for a 30-year fixed mortgage. They had purchased $1.25 trillion debt and this has kept mortgage rates below 5%. The increase is said to be due to signs of the economy slowly recovering rather than the lack of Fed support.
The Fed played a great role in keeping mortgage rates so low, but that is not the only factor determining mortgage rates. Mortgage rates fluctuate on a daily bases, the rate was under control with the involvement of the Federal Reserve. Without the funds, now the mortgage market is bound to flow with economy. Experts state that they expect rates to reach 5.8% by the end of 2010.
As of now borrowers who were able to pay 1% of the loan amount in upfront fees, qualified for a 30 year fixed mortgage rate of less than 5%. For a borrower with a perfect credit score, financials and income can qualify for a rate of 4.875% fir a 30 year fixed. For borrowers who have at least a 20% down payment can qualify for great rates as well.
Rates also rose for 15-year mortgages from 4.39% a week ago to 4.52%. A 5 year ARM increased as well from 4.10% to 4.25% and for a one year ARM the rates jumped from 4.05% to 4.14%.
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