Although fixed mortgage rates posted a slight decline week-over-week, it was a real roller coaster ride along the way. The average 30-year fixed rate was 6.41 percent last week, and after falling near 6 percent on Feb. 29, came boomeranging back in the first few days of March. Rates for adjustable mortgages increased, narrowing the gap between fixed and adjustable rates that had expanded the four previous weeks. The volatility in fixed mortgage rates can be pegged to economic uncertainty and worries about the health of bond insurers that guarantee payments to mortgage bond investors. A sharp stock market selloff to close out February helped push mortgage rates lower but that quickly gave way to renewed concerns among mortgage investors about the certainty of their income streams. The resulting higher risk premium has mortgage rates at a spread above risk-free Treasury notes that rivals the largest seen in 2002 and 1998, two periods of notable mortgage market volatility.
The mortgage rate winds can change direction quickly. Five weeks ago, the average 30-year fixed mortgage rate was 5.57 percent, meaning that a $200,000 loan would have carried a monthly payment of $1,144.38. Now that the average conforming 30-year fixed rate is 6.32 percent, the same $200,000 loan carries a monthly payment of $1,240.55.
