The Wall Street Journal

16 April  2010

Home-mortgage rates fell this week, returning to levels seen two weeks ago, according to Freddie Mac’s weekly survey of conforming rates, released on Thursday.

The 30-year fixed-rate mortgage averaged 5.07% for the week ended April 15, down from 5.21% last week. A year ago, the mortgage averaged 4.82%. The 15-year fixed-rate mortgage averaged 4.40%, down from 4.52% last week and 4.48% a year ago.

The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 4.08%, down from 4.25% last week and 4.88% a year ago. And the one-year Treasury-indexed ARM averaged 4.13%, down from 4.14% last week and 4.91% a year ago.

“After rising for four consecutive weeks, mortgage rates eased back to where they were two weeks ago and still remain historically low,” said Frank Nothaft, Freddie Mac vice president and chief economist, in a news release.

But rates will rise in the future, some say.

The recent rise in rates “probably isn’t over, if in temporary retreat,” said Keith T. Gumbinger, vice president for HSH Associates, a publisher of consumer-loan information.

The upward pressure in rates was only partly due to the Federal Reserve recently ending its purchase of mortgage-backed securities, Mr. Gumbinger said. “The bump is partially related to uncertainty surrounding the Fed’s exit, but mostly due to the rise in underlying interest rates as economic news has become somewhat brighter of late,” Mr. Gumbinger said in an email. “The influential—for mortgage rates—yield on 10-year Treasuries touched over 4% last week.”

Low mortgage rates are helping to stabilize the housing market, Mr. Nothaft said. “The Fed noted that residential activity increased while home prices were stable across most of its 12 districts over the six weeks prior to April 5. In addition, credit standards remained generally unchanged across the nation, while credit quality was mixed, according to the report,” he said.