For those worried the end of government mortgage-backed securities purchasing could spell a dramatic increase in home loan rates, there's no need to hit the panic button just yet. A slight rise (+0.125) in long term interest rates Friday was more the product of a Labor Department report showing that the US added 162,000 jobs in March, the biggest monthly gain in three years, than it was a direct effect of the March 31st Fed MBS exit.

Mortgage-backed securities prices, which drive mortgage rates in the opposite direction, have dropped twice in the past 10 days each time pushing conforming 30-yr fixed rates up 1/8, once before and once after March 31st. 

Reports depicting the up-tic in rates as the end of an era of low fixed mortgage rates are unfounded. While in a doomsday scenario it's speculated the Fed exit from MBS buying could leave a void in MBS markets big enough that demand and prices plummet causing long term fixed rates to skyrocket, fed officials suggest private buyers are ready to step in and take their place.

According to FreeRateUpdate.com conventional 30-yr fixed mortgages are available today at 5 percent to well qualified consumers paying a standard .07 to 1 point origination. 15-yr fixed mortgages are now available at 4.375 percent, up from 4.25. Today's 5/1 ARM rates are at 3.75 percent, up from 3.625. Despite the sub 4 percent 5/1 ARM rate, data shows borrowers are choosing fixed loans over adjustable loans at a record ratio and have been for several months (96 percent of new mortgages are fixed - Freddie Mac).  

FHA 30-yr fixed mortgages are available at 4.875 percent today, an 1/8 lower than conventional loans. Securing FHA financing means a higher APR, despite the note rate and origination being the same, MI and other FHA fees charged on FHA loans drive up the cost. Increasing those costs yesterday was a boost to MI from 1.75 to 2.25 percent of the loan amount. The increase (+0.50) in the premium (MI) charged to borrowers at closing is part of an effort to help the Federal Housing Administration guard against losses from record high loan default rates.  

Jumbo mortgages remain available at a 30-yr fixed rate of 5.625, the same as last week.  

The benchmark 10-yr treasury yield, a leading indicator for fixed mortgage rates, is near a 1 year high.

Rates mentioned in this article are available to well-qualified consumers paying a standard .07 to 1 point origination as verified by FreeRateUpdate.com research of over two dozen wholesale lenders' rate sheets. Conventional: Conforming Freddie Mac and Fannie Mae insured mortgages. FHA loans are backed by the Federal Housing Administration.

Today's Mortgage Rates:

• 30 yr fixed rate - 5.000%

• 15 yr fixed rate - 4.375%

• 5/1 ARM rate - 3.750%

• FHA 30 yr fixed rate - 4.875%

• FHA 15 yr fixed rate - 4.500%

• FHA 5/1 ARM rate - 3.750%

• VA 30 yr fixed rate - 5.000%

• Jumbo 30 yr fixed rate - 5.625%

• Jumbo Conforming 30 yr fixed rate - 5.250%

Source: FreeRateUpdate.com

Published: April 6, 2010

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Edward James Ferrara III spent 8 years (2001-2008) brokering and banking home loans in Orange County, CA to the tune of some 500 million dollars in mortgages funded by May of 2008, when he founded the rate research website FreeRateUpdate.com. Ed is not only the founder of FreeRateUpdate.com, he is also a lead contributor to the site, whose roster includes over a dozen writers and of which receives over 50,000 page views per month. Ed's passion for helping consumers to avoid falling victim to banks dishing out higher rates for bigger profits has helped FreeRateUpdate.com to become a unique authority on mortgage rates. Ed recently married Cheyne Aki Gantt and became a first time father to Edward James Ferrara IV, born August 31st 2009. Ed and FreeRateUpdate.com have recently been cited in numerous media outlets including the Los Angeles Times, Yahoo Finance, and Marketwatch.