Both bond yields and mortgage rates posted increases this week in the absence of any bad news in financial markets. The average 30-year fixed mortgage rate crossed the 6 percent mark, to 6.12 percent. Meanwhile, the average 5/1 ARM rate declined for a second consecutive week, falling back to 6.04 percent. This restores some semblance of a normal relationship between fixed rate mortgages and the 5/1 ARM. Rates for adjustable mortgages are typically lower than those of fixed rate mortgages, an enticement for borrowers shouldering interest rate risk. But that relationship was thrown on its ear the previous two weeks as rates for adjustable mortgages spiked amid a lack of investor demand. Even now, rates for one-year, seven-year, and ten-year ARMs remain above the level of the average 30-year fixed rate mortgage.
Mortgage rates are right back where they were at the beginning of the year, but it has been a wild ride over the past three months. The average 30-year fixed mortgage rate was as low as 5.57 percent in January, meaning that a $200,000 loan would have carried a monthly payment of $1,144.38. In February, the average 30-year fixed rate got as high as 6.41 percent, which meant the same $200,000 loan would have carried a monthly payment of $1,252.32.
