Mortgage Rates Still Falling

By ANDREW KEATTS, The Daily Transcript
Monday, August 9, 2010

Mirroring the national trend, average mortgage rates continued to fall in San Diego County during the week ending Aug. 6, according to numbers released by the San Diego Chapter of the California Association of Mortgage Professionals (SD-CAMP).

A 30-year fixed mortgage in San Diego carries an average interest rate of 4.075 percent, down from 4.1 percent last week. Interest on 15-year fixed loans remained at 3.725 percent.

Freddie Mac (NYSE: FRE) reported last week that 30-year fixed loans during the same period hit an all-time low of 4.49 percent, down from 4.45 percent the week previous and 5.22 percent a year ago.

Interest rates for 15-year fixed mortgages during the period were 3.95 percent, down from 4 percent a week ago and 4.63 percent a year ago.

Conventional seven-year ARM rates remained at 3.25 percent in the county. Rates on five- and three-year ARMs were 2.95 and 2.925 percent, down from the previous week when both were 3.031 percent.

Thirty-year fixed FHA and VA loans were both 4.225 percent, up from the week previous when FHA loans were 4.175 percent and VA loans were 4.188 percent.

"This is a continuation of the national trend with slight adjustments," said David Van Waldick, president elect for 2011 of SD-CAMP and principal of Western Mortgage in Carlsbad, adding that the averages can be affected in any given week by market conditions or an individual lender’s position.

Warning that predicting short-term fluctuations of mortgage rates is difficult because they are affected by global economic developments, Van Waldick said he could envision rates continuing to decline, setting 3.5 percent on a 30-year fixed loan as the absolute basement.

"You could argue that given government stimulus and bank borrowing rates, that we’d see rates lower still," he said. "With the Fed charging banks at essentially 0 percent interest, you could say they should be passing this on to consumers. Clearly banks seem to be holding a little juice in their own pockets."

He said the increases in rates for FHA and VA loans could be attributed to adjustments from individual lenders, but speculated that they might be the result of the Department of Housing and Urban Development’s announcement last week that it would reduce upfront premiums on FHA loans while increasing monthly premiums.

The averages reflect the published rates of five major mortgage lenders or banks in San Diego County for each of the six mortgage types.

Marsha Lenyk, president of Award Mortgage Inc. compiled the rates on Friday, Aug. 6.

SD-CAMP’s averages assume a loan amount up to the conforming loan limit of $417,000, a maximum loan-to-value of 80 percent and an interest rate with one point origination fee for borrowers with a minimum credit score of 720 -- with fully documented income for a single-family, detached, owner-occupied, primary residence