Mortgage Interest Rates Fall for Third Straight Week

After rising steadily just before the end of last year in what some feared was the start of a continuing upward trend, interest rates on home loans have dropped for three consecutive weeks in January, according to reports from both Freddie Mac and Bankrate Thursday.

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For the week ending January 21, 2010, Freddie Mac reported that the 30-year fixed-rate mortgage (FRM) averaged 4.99 percent (0.7 point), down from the previous week when it was 5.06 percent. Last year at this time, the 30-year FRM averaged 5.12 percent in the GSE's study.

Freddie Mac's report put the 15-year FRM at 4.40 percent (0.6 point) this week. Last week it was 4.45 percent, and a year ago at this time, rates for 15-year mortgages averaged 4.80 percent, Freddie said.

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Frank Nothaft, Freddie Mac's VP and chief economist, says rates could continue to hover low as the federal funds futures market indicates no increase in the Federal Reserve's target rate following its upcoming committee meeting at the end of the month.

Bankrate.com's weekly national survey told a similar interest rate story. Its panel of mortgage experts said they too expect mortgage rates ""to remain more or less unchanged over the next 30 to 45 days.""

While Bankrate's analysis of rates provided by the top 10 banks and thrifts in the top 10 markets showed long-term rates a bit higher than Freddie Mac's survey, it still marked the third straight week of declines.

The average conforming 30-year fixed mortgage fell to 5.15 percent this week (0.45 point), according to Bankrate's study, down from 5.23 percent the week before. Rates for 15-year fixed mortgages dropped from 4.62 percent last week to 4.56 percent (0.42 point).

The larger jumbo 30-year fixed rate retreated to 5.93 percent (0.37 point), Bankrate said. It's the lowest rate recorded by the company for this type of loan product since June 2005. Although the margin between rates on jumbo mortgages and smaller conforming loans has narrowed further in recent weeks, it is still nearly one-half percentage point above normal, pre-credit crisis levels, Bankrate explained.