Mortgages

  • 5.16% (30-year fixed)
  • 0.42 (average points)

Here's a look at the state of mortgage rates from Bankrate.com's weekly national survey of large banks and thrifts conducted Feb. 16, 2011.

Days after the Obama administration recommended the federal government wind down its involvement in the nation's mortgage system, home loans sank after rising sharply last week.

The 30-year fixed-rate mortgage fell by 7 basis points in the latest Bankrate survey, which found a nationwide average of 5.16% for the benchmark home loan. Last week's average of 5.23% had been the highest since last April.

Most other rates moved in the same direction. The 15-year fixed-rate mortgage settled at 4.43%, a decline of 5 basis points. A basis point is one-hundredth of 1 percentage point.

Jumbo mortgages, or generally those more than $417,000, were little changed, dropping 1 basis point to 5.73%.

However, not all rates fell. In the adjustable arena, the 5/1 ARM averaged 4.05%, the Bankrate survey found, a gain of 4 basis points. With a 5/1 ARM, the mortgage is fixed for five years and adjusted annually thereafter.

Last week, in a long-awaited report, the Treasury and the Department of Housing and Urban Development recommended that Washington move toward winding down Fannie Mae and Freddie Mac, the government-sponsored enterprises created to back home mortgages.

Fannie and Freddie were hobbled by the mortgage market collapse of 2008, requiring the government to provide a bailout costing an estimated $130 billion. The resulting political firestorm has led Washington to reassess the government's proper role in the mortgage market.

"We are going to start the process of reform now, but we are going to do it responsibly and carefully so that we support the recovery and the process of repair of the housing market," Treasury Secretary Timothy Geithner said when the report was released.

But analysts have noted that the report is vague about what might fill the void as Freddie and Fannie exit the market. There have been calls for the private sector to step in, although critics said it isn't clear that's possible. Fannie, Freddie and the Federal Housing Administration jointly guarantee about 90% of U.S. home loans.

Thus, a reduced government role would almost certainly make mortgages costlier, although estimates vary as to how much. "How is Joe Six-Pack ever going to be able to afford a home?" Rep. Dennis Cardoza, a California Democrat, said to The New York Times.

Indeed, some experts said the political hurdles to the report's proposals likely mean that reforms, if any, will be modest. "You don't have to be a cynic to conclude that Fannie and Freddie aren't going anywhere," Bethany McLean, the prominent economics writer, wrote in an article in the online magazine Slate this week.

Find out what your monthly mortgage payment could be using Bankrate's mortgage calculator.