Current mortgage rates are headed lower and lower these days despite the fact that we are coming out of a recession and the Federal Reserve Open Market Committee will be raising interest rates in the coming year.

The government sponsored entity, Freddie Mac, released it’s mortgage rate survey showing 30 year mortgage interest rates near a record low and 15 year mortgage interest rates hitting a record low.

The average fixed 30-year mortgage rate was down to4.83 percent this week, with an average 0.7 discount points for the week ending November 12, 2009. Down from last week’s average mortgage interest rate of 4.91 percent. A year ago 30 year fixed rate mortgages averaged 6.04 percent.

Fixed 15-year mortgage rates averaged 4.32 percent this week, down from last week’s average home loan rate of 4.40 percent. Average mortgage discount points were 0.6 points. A year ago at this time, the 15-year FRM averaged 5.73 percent. 

Average five year Treasury-indexed hybrid adjustable rate mortgages averaged 4.25 percent this week, down from the prior week’s average of 4.35 percent.  Last year at this time the average 5-year adjustable mortgage interest rate was 5.87 percent. Mortgage points averaged 0.6 points.

One year U.S. Treasury indexed adjustable rate mortgages averaged 4.35 percent this week, , down from last week when it averaged 4.47 percent.  At this time last year, the 1-year ARM averaged 5.29 percent. Discount mortgage points average 0.6 points.

Freddie Mac’s vice president and chief economist had the following comments about the recent low mortgage interest rates.

“Interest rate on 30-year fixed-rate mortgage loans fell for the third consecutive week to the lowest since the week ending May 21^st, while 15-year fixed rates were the lowest since our records began in 1991,”. Low fixed rates throughout the third quarter prompted an estimated $1.1 trillion in refinancing activity, saving homeowners about $10 billion in aggregate monthly payments over the first 12 months of their new loan.  Moreover, for the fourth consecutive quarter, more than 95 percent of prime borrowers who originally had an ARM selected a conventional fixed-rate mortgage in the third quarter of this year.”

 “Meanwhile, new home building showed some weakness in recent months.  Residential construction eased 10.6 percent (annualized) between September and October, largely driven by a 33.3 percent decline in new condominium and apartment buildings and represented the slowest pace since records began in 1959.  And home builder confidence in November remained a relatively low level, according to the National Association of Home Builders.”

Freddie Mac announced today that 95% of borrowers who refinanced a mortgage in the third quarter of 2009 refinanced to a fixed-rate mortgage from an adjustable rate mortgage. 

Most refinancers choose a 30-year fixed-rate mortgages over all other mortgage types. 15-year fixed-rate mortgages gained in popularity among people who refinanced in the third quarter who previously held 30-year fixed-rate mortgage, balloon mortgages or an adjustable rate mortgage.

Home-owners are taking advantage of near record low mortgage interest rates and refinancing to fixed rate products from riskier adjustable rate mortgages. A smart move to refinance to fixed mortgages since mortgage rates are expected to head higher in the coming year.

“Low rates throughout all of 2009 have prompted about $1.1 trillion in refinancing activity this year, and we estimate that the borrowers who took advantage of refinancing opportunities in the first three quarters of the year will save about $10 billion in aggregate monthly payments over the first twelve months of their new loan,” said Frank Nothaft, vice president and chief economist for Freddie Mac.  “Over the first nine months of this year, the average interest rate offered by lenders on 30-year fixed-rate loans was 5.1 percent, on 15-year fixed-rate loans was 4.7 percent, and on 5/1 hybrid ARMs was 4.9 percent according to the Primary Mortgage Market Survey®.  Because interest rates across fixed- and adjustable-rate products are similar and fixed-rate loans provide the benefit of a certain principal-and-interest payment, most borrowers have chosen fixed-rate loans.

“For borrowers who can swing the higher payments that come with shorter term mortgages, the interest savings really add up.  The average fixed-rate refinance loan in the first three quarters of 2009 had a principal balance of about $225,000 and an initial interest rate of 6.25 percent.  By choosing another 30-year fixed-rate mortgage, a borrower could lower their monthly payment by $160 per month and would accumulate $3,200 in equity through principal payments over the first year.  In contrast, a borrower who chose a 15-year fixed-rate mortgage would have an even lower new interest rate but their monthly payment would rise by $350 per month; however, at the end of the first year they would have paid down $10,650 of the principal balance, thus building up home-equity wealth more quickly.”

The House and Senate has voted to extend the first time home buyer credit that was going to expire on November 30, 2009. President Obama is expected to sign the bill into law sometime today.

The $8,000 credit for first time home-buyers, which includes anyone who hasn’t owned a home in the past three years, has been extended to April 30, 2010. In order to receive the credit you must sign a sales contract by April 30 and close on the home by June 30, 2010.

The National Association of Realtors lobbied successfully to have the credit expanded to include other home owners to help fuel home sales. The credit has been expanded to include a $6,500 tax credit for anyone who is buying a home that has owned the current home for at least five years.

The renewed and expanded tax credit along with current low mortgage rates gives potential home buyers a powerful incentive to purchase a home. Hopefully the housing market will continue on the path to recovery. Many people in the industry were worried about housing market after the credit expired in November.

The tax credit doesn’t include vacation homes and is only for a home purchase that will be your primary residence and costs $800,000 or less.The credit is also phased out for individuals with annual incomes above $125,000 and for joint filers with incomes above $225,000.

If you’re in the military serving outside the United States for at least 90 days, the tax credit is extended for another year.

Current mortgage interest rates have been hovering just above 5.00 percent for a fixed rate 30 year mortgage. Current 15 year mortgage interest rates are just below 4.50 percent.

This past Thursday Freddie Mac released their weekly Primary Mortgage Market Survey that showed a small uptick in longer term mortgage interest rates.

In the most recent PMMS survey fixed rate 30 year mortgages were at 5.03 percent for the week ending October 29, 2009, up from last week when the average mortgage interest rate was 5.00 percent. 30 year home loan rates were above 6.00 percent a year ago at 6.46 percent. Interest rates are still low historically speaking so if you’re looking to buy or refinance an existing mortgage you should go ahead and do it.

Average 15 year fixed mortgage interest rates are 4.46 percent this week, up from last week when the average mortgage rate was 4.43 percent. A year ago at this time 15 year home loan rates were also above 6.00 percent at 6.19 percent.

Adjustable mortgage rates were also higher this week over last week, current Treasury indexed five year mortgage rates are at 4.42 percent, up from last week’s average loan rate of 4.40 percent. A year ago at this time 5 year mortgage rates were at 6.36 percent. One year mortgage rates are currently at 4.57 percent, up from last week’s average mortgage loan rate of 4.54 percent.

Frank Nothaft, Freddie Mac vice president and chief economist had the following comments about mortgage interest rates in this week’s survey.

Interest rates for 30-year fixed mortgages have averaged just below 5 percent this year, which is the lowest 10-month average since the survey began in 1971. As a result, refinance activity has accounted for almost seven out of 10 mortgage applications on average this year, according to Freddie Mac’s survey.

Economic data releases this week offered mixed signals as to the current state of the housing market. For example, total existing home sales jumped 9.4 percent to an annualized rate of 5.57 million homes in September, the strongest pace since July 2007, according to the National Association of Realtors®.

However, new home sales unexpectedly fell 3.6 percent to 402,000 houses, the weakest since June of this year, based on figures from the Department of Commerce. Nonetheless, stronger housing demand has lowered the inventory of unsold existing homes in September to the lowest since January of this year and for new homes the lowest since November 1982, which should help stabilize falling house prices.

Home equity loans are fixed-rate mortgage loans that with a fixed monthly payment. A home equity loan is secured by the available equity in your home. You receive the money you borrow all at one and then you pay it back over time in fixed monthly payments.

Home equity loan rates are a few percentage points higher than home equity line of credit (HELOC) rates. The interest rates are higher but you know what your payments will be over the life of the home loan because the rate stays the same. Unlike a variable rate loan like a HELOC.

Home equity loans are usually pegged to the Prime Rate that is published in The Wall Street Journal. The WSJ prime rate is also used to set interest rates on credit card rates and on car loans.

You can use a home equity loan to pay off higher interest rate credit cards. Home equity loan rates are around 7 percent these days, the average credit card rate is a lot higher, usually in the double digits and can approach 20% or higher for people that have less than stellar credit histories.

Using a home equity loan to renovate or add onto your house is another popular use. When home equity loans are used in this way you can also get a tax deduction on the interest you pay on the loan.

Freddie Mac, the government controlled agency that buy mortgages from lenders has a home foreclosure program called HomeSteps. The HomeSteps program offers buyers of foreclosed homes up to 3.5%  of a home’s price towards closing costs. The foreclosed home must be purchased for a primary residence and must be chosen on Freddie Mac’s website HomeSteps.com

Closing costs on a mortgage can run into the thousands of dollars, so this offer can help buyers who might not be able to afford a home right now. If you want to take advantage of this offer you will have to hurry, you have to submit an offer for a home before October 31,2009 and close on the home buy December 31,2009.

Now is a good time to buy a home, mortgage interest rates are near historic lows, current mortgage interest rates are near 5.00 for conforming fixed 30 year mortgages. There is also a first time home buyer tax credit of $8,000 that is good until November 31, 2009. These incentives plus the Freddie’s incentives make buying a home very compelling right now.

The HomeSteps program also includes a two year warranty on major appliances and other warranties on the foreclosed home including the following. 

• Air Conditioning
• Heating System
• Electrical System
• Plumbing System
• Water Heater
• Stove
• Microwave
• Refrigerator
• Dishwasher
• Washer & Dryer
• Garbage Disposal
• Trash Compactor
• Garage Door Opener
• Ceiling Fan

For more information on the foreclosure program visit HomeSteps.com

Bank of America is offering some of the best mortgage interest rates that are available these days. Their mortgage interest rates are very competitive with the national average mortgage interest rates available. Today’s 30 year national average mortgage interest rates are at 4.964 percent.

Mortgage Interest Rates

Bank of America’s fixed 30 year mortgage interest rates are at 5.00 percent. We received this mortgage rate on a conforming mortgage for a home purchase in California. The discount points on this home loan was 1.125. Discount points allow you to receive a lower mortgage rate.

Discount points allow you to ”buy down” the loan rate by paying a percentage of the mortgage upfront at closing. Some banks and mortgage companies will allow you can also roll the cost of discount points into the mortgage if the LTV ratio is still acceptable to them. Most banks once again require a LTV ratio of 80%. Meaning you can’t owe more than 80% of the value of the home.

Other mortgage rate quotes we received include a 4.25% mortgage interest rate on a 15-year mortgage. The points on this home loan were also 1.125 percent. On a 5/1 adjustable rate mortgage (ARM) the rate was 4.00% with discount points at 0.87.

Bank of America is also offering their “Net 5″ mortgage with is an interest only payment adjustable rate mortgage. This mortgage product allows you to only pay interest in the first 5 years of the home loan. Most banks aren’t offering interest only home loans anymore, unlike the hay day of the housing boom when mortgage lending practices were thrown out the window.

Mortgage rates have been going down since late 2008 and the beginning of this year. Lower U.S. Treasury yields and the Federal Reserve have played an active role in lowering mortgage rates to come to the rescue of the housing market. 

Most economits believe that  the Fed won’t raise interest rates until the middle of 2010 when the economy and housing market starts to recover. 

The Fed Funds rate has been in a target range of 0% to one quarter percent since late last year when the credit crises hit and the recession started. The Federal Open Market Committee decided to keep the targeted Fed funds rate in the current range for now. Current mortgage rates will also remain in the current low range until the economy recovers and inflation becomes a threat. At that point the Feds will start raising interest rates again.

As of today, 30-year conforming mortgage rates are currently at 4.97 percent. 15-year conforming mortgage rates are at 4.45 percent, down from the prior week’s average 15-year mortgage rate of 4.47 percent. 5/1 adjustable rate mortgages are nearing 4.00 percent, the current 5/1 adjustable mortgage rate is at 4.11 percent, down from the previous week’s average mortgage rate of 4.20 percent.