Mortgage rates moved higher over the past week due to continued issues in credit markets, but rates for conforming loans remain below the 6 percent mark. The gap between conforming and jumbo mortgage rates – those for loans larger than $417,000 - remains abnormally wide, with the average jumbo fixed rate at 7.16 percent. Although the economic stimulus package will lift the conforming loan limits in designated high-cost housing markets, just what those new limits will be and what rates affected borrowers will pay remains uncertain. Closing the gap between jumbo and conforming rates even halfway would generate significant savings, as a homeowner with a $600,000 loan able to refinance from 7.16 percent to 6.56 percent would save $240 per month.
Fixed rate mortgages remain the most attractive option for borrowers. When the credit crunch began six months ago, the average 30-year fixed mortgage rate was 6.68 percent, meaning that a $200,000 loan would have carried a monthly payment of $1,287.90. Now that the average conforming 30-year fixed rate is 5.96 percent, the same $200,000 loan carries a monthly payment of $1,193.96.
