Bankrate: Mortgage Rates Hold Steady

Various forces vied to push rates upward and pull them downward

RISMEDIA, October 20, 2006—Mortgage rates showed little movement this week. The average 30-year fixed mortgage remains at 6.42%. According to Bankrate.com's weekly national survey of large lenders, the 30-year fixed rate mortgages had an average of 0.32 discount and origination points.

The average 15-year fixed rate mortgage, which is popular for refinancing, moved to 6.10%, down from 6.11% last week. On larger loans, the average jumbo 30-year fixed rate slipped to 6.67% from 6.68%. Adjustable rate mortgages showed a slight increase. The average 5/1 adjustable rate mortgage inched to 6.24 from 6.23% and the average one-year ARM rose to 5.92 from 5.90%.

Various forces vied to push rates upward and pull them downward. Leading the way were two important measures of inflation that came out this week: the Producer Price Index, which measures inflation at the wholesale level, and the Consumer Price Index, which measures inflation at the retail level. Both of them showed that overall prices fell in September, but core prices went up.

Overall prices include food and fuel. Core prices exclude food and fuel because those two commodities can jump up and down rapidly from month to month in response to bad weather, war and the inconsistency of the markets. And that's what fuel prices did. Retail energy prices fell 7.2% in September, and wholesale energy prices fell 8.4%. But when you strip out food and energy, prices were up. After all the pushing and pulling was done, mortgage rates ended up pretty much where they were last week.

Fixed mortgage rates are higher than one year ago. At the time, the average 30-year fixed mortgage rate was 6.17%, meaning that the monthly payment on a loan of $165,000 was $1,007.36. With the average 30-year fixed rate now 6.42%, the same loan originated today would carry a monthly payment of $1,034.25. Fixed mortgage rates are a compelling refinancing alternative for adjustable rate borrowers facing sharp payment adjustments.

Survey Results

30-year fixed: 6.42% — unchanged from last week (avg. points: 0.32)
15-year fixed: 6.10% — down from 6.11% last week (avg. points: 0.34)
5/1 ARM: 6.42% — up from 6.23% last week (avg. points: 0.34)

Bankrate's national weekly mortgage survey is conducted each Wednesday from data provided by the top 10 banks and thrifts in the top 10 markets.

For a full analysis of this week's move in mortgage rates, go to: http://www.bankrate.com/mortgagerates.

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