Interest Rate Round-Up

[Jul 8, 2007.]

A recent survey of interest rates on typical banking products conducted by Bankrate.com yielded mixed results.

The survey of large banks and thrifts, performed June 20th, indicates that home equity lines of credit stood at a rate of 8.19 percent, with 8.01 percent assigned for loans. While the home equity line of credit was unchanged, the fixed-rate home equity loan rate jumped three basis points.

Meanwhile, on the housing front, mortgage rates dropped for the first time in nearly two months.

A number of factors may be responsible for the change. To begin with, consumer prices increased 0.7 percent in May, with the core inflation rate (the rate excluding food and fuel prices) standing at 0.1 percent. Since the inflation rate was not considered to represent much of a threat, mortgage rates dropped in response.

Meantime, housing starts are down compared to the rate last year. While such a report was not surprising, it still had a negative effect on bond yields and mortgage rates. The 30-year fixed rate decreased eight basis points to 6.76 percent, with a basis point representing one-hundredth of a percentage point. Similarly, the average 15-year fixed rate, which is common in refinancing, dropped eight basis points to 6.45 percent.

When larger loans are considered, the average jumbo 30-year fixed rate plummeted 13 basis points to 6.99 percent. Meanwhile, adjustable-rate mortgages also dropped, with the 5/1 ARM falling nine basis points to 6.58 percent. The one-year ARM decreased only one basis point, to 6.18 percent.

Auto rates were largely unchanged. For instance, new car loan rates were no different than the week before. Specifically, the 60-month new car rate is 7.72 percent; the 48-month new car loan rate is 7.66 percent; and the 36-month rate is 7.59 percent. Meanwhile, the 48-month used car loan rate dropped to 8.42 percent, with the 36-month rate falling to 8.47 percent.

Julie Ann Amos
July 8th 2007
Recent Housing News

• Worries About Interest Rates Decline on Wall Street
  Wall Street is apparently not as worried about rising interest rates as it was earlier this year—judging from a recent rise in the Dow. [July 7th 2007]


• Homeowners Opting for Fixed-Rate Mortgages
  The end of the nation's housing boom has also meant a decline in the number of people opting for so-called "balloon mortgages." [July 6th 2007]


• Forecast Darkens for U.S. Subprime Mortgage Market
  Subprime mortgages are often considered the wild cards of the U.S. mortgage industry. Extended to individuals who may have less-than-stellar credit, these mortgages are accompanied by a great amount of risk for lenders. [July 2nd 2007]


• Foreclosures Once Again on the Rise
  The Mortgage Bankers Association is reporting that foreclosures on adjustable-rate mortgages made to individuals with troubled credit histories skyrocketed in the first quarter of 2007. [July 2nd 2007]