Mortgage rates sink on crisis in Japan

Mortgage rates fell sharply this week as investors pulled back on fears a crisis in Japan could stall a global recovery, Bankrate Inc. said Thursday. Japan’s economy has left investors in a state of uncertainty after a Tsunami and earthquake devastated the region, leaving thousands dead and the country’s nuclear facilities in an unstable state. Mortgage rates reacted to investor fears with the 15-year, fixed-rate mortgage falling to 4.12%, down from 4.32%. Meanwhile, the 30-year, fixed-rate mortgage dropped to 4.91%, compared to 5.04% last week, Bankrate said. The larger jumbo 30-year fixed-rate mortgage hit 5.46%, while the average 5-year adjustable rate mortgage dipped to 3.74%, Bankrate said. Freddie Mac also linked falling interest rates to fears over Japan. The GSE said Thursday the 30-year fixed-rate mortgage fell to 4.76%, down from 4.88% a week earlier. Meanwhile, the 15-year FRM hit 3.97%, a drop from 4.15% last week and 4.33% a year earlier. The 5-year Treasury-indexed hybrid ARM also declined to 3.57%, compared to 3.73% last week and 4.09% in February 2010. “With the crisis in Japan, investors rushed to buy the security of U.S. Treasury bonds, which lowered its yields and other interest rates as well. This allowed fixed mortgage rates to drift lower this week,” said Frank Nothaft, vice president and chief economist for Freddie Mac. The Mortgage Bankers Association reported Wednesday that the average interest rate for a 30-year, fixed mortgage dropped to 4.79% from 4.93% during the latest full week on record. In addition, the average rate for a 15-year, fixed-rate mortgage declined to 4.03% from 4.17%. Interest rates have been volatile all year, dropping below 5% and then rising again. The last time interest rates hit 6% was in November 2008, according to Bankrate data. “At the time, the average 30-year, fixed rate was 6.33%, meaning a $200,000 loan would have carried a monthly payment of $1,241.86,” Bankrate explained. “With the average rate now 4.91%, the monthly payment for the same size loan would be $1,062.67, a difference of $179 per month for anyone refinancing now.” Write to Kerri Panchuk.