Mortgage rates plunge: For a few borrowers, 30-year fixed loans under 4%


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Would a 30-year fixed-rate mortgage for less than 4% make you think about refinancing or even buying a home in today’s battered housing markets?

Home loans at that seemingly hallucinatory rate were out there this week, mortgage industry insiders said Tuesday -- at least for those few gold-plated borrowers willing to fork over king-size upfront discount points and origination fees.


Home loans almost always march in tandem with the yield on long-term government bonds.

And a combination of bleak economic news and lawmakers’ agreement to raise the federal debt ceiling sent the yield on the 10-year Treasury note plunging to 2.62% on Tuesday -- down from more than 3.7% in February.

As usual, mortgage rates followed, reaching their lowest point since November, according to the real estate website Zillow.

‘The economy is shrinking. The real estate depression continues,’ said Laguna Niguel mortgage broker Jeff Lazerson. But, he added: ‘Rates are dropping through the floor.’

Lazerson said rock-solid borrowers were able to qualify for a 30-year fixed-rate loan at 4.5% while paying nothing in upfront costs.

Those who paid 1% in upfront fees and picked up the tab for appraisals, title insurance and other third-party fees were getting 30-year loans at 4.125% fixed, he said.

And Lazerson was quoting 3.875% on 30-year loans for low-risk borrowers willing to pay 3% of the mortgage amount in upfront points and fees: “The first time ever in my 24 years [as a loan broker] I can get pricing under 4%.”

At retail offices of Wells Fargo Home Mortgage, the nation’s largest home lender, a few borrowers also were able to obtain the 30-year fixed-rate loans for less than 4%, spokesman Tom Goyda said. To qualify, Goyda said, they had to be excellent credit risks willing to pay 3.25% of the loan amount in discount and origination fees.

Just last Thursday, mortgage finance giant Freddie Mac reported that the 30-year fixed loan had climbed to its highest level in three weeks on concerns about the debt ceiling.

At the time, lenders were offering the 30-year fixed loan at an average of 4.55% to solid borrowers, Freddie Mac said. The borrowers would have had to pay 0.7% of the loan amount to the lenders and additional fees to appraisers and other third parties to obtain the rate.


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Homeowners who want to trade up are stuck waiting

-- E. Scott Reckard