Today's Mortgage Rates

The Federal Reserve's firehose of liquidity into Treasury and mortgage markets has calmed them to a degree, and mortgage rates have begun to settle down again.

This week, Freddie Mac reported that the average offered rate for a conforming 30-year fixed-rate mortgage slid 15 basis points (0.15%), taking back about half of the previous week's spike and landing at an even 3.50 percent. For conforming 15-year FRMs, the decline was fourteen basis points (0.14%), leaving the popular shorter-term mortgage at an average rate of 2.92% the week. Hybrid 5/1 ARMs are still showing signs of market dysfunction, though; these loans generally aren't sold to secondary markets, but rather put on lender books. Lenders continue to price these defensively as they really aren't interested in adding to holdings at the moment, and the initial fixed interest rate for these products rose by 23 basis points to 3.34 percent.

The Federal Reserve's initial offer to buy up to $200 billion in mortgage-backed securities did little to calm markets last week, as the Fed blew through most of that money by late in the week, and tightening markets last Thursday and Friday saw mortgage rates again on the rise. On Monday morning, the Fed announced that it would purchase unlimited amounts of MBS and Treasuries, and the reassurance that there would be a purchaser in the markets for these instruments regardless of price did finally have the desired effect of soothing frazzled investors as they looked to move virtually everything to cash.

The Fed's actions certainly helped the majority of the market, which is in conforming, FHA, VA, USDA and QM-compliant loans. However, the non-QM market is essentially closed at the moment, as there are few investors who are willing to fund these mortgages or purchase MBS made from them. To a lesser degree, this is also the case in the jumbo mortgage market, but some lenders will still consider finding these high-dollar, often superior quality loans, but consumers may have to shop a little harder to find them or find them at rock-bottom rates. However, "conforming jumbo" (aka "agency jumbo") markets remain open, with loans of up to $765,600 in certain "high-cost" markets.

It looks as though the majority of the mortgage market is functioning again, and coupled with a sharp slowing of inbound mortgage applications last week, it seems likely that mortgage rates will continue to settle a little lower in the days ahead, probably slowly and cautiously.

To help you stay up to speed, we track and report on the economic conditions that affect mortgage rates and their impact on housing markets and consumers in each week's MarketTrends newsletter. Read the most recent edition on HSH.com or subscribe for email.