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Mortgage Rates Inch Up a Bit

Current mortgage rates in the United States are still at some of their lowest levels in decades, but a slight increase was detected on the third week in February due to an improved jobs report. Other good news for Wall Street may be in store with regard to the sovereign debt crisis in Greece, as the Mediterranean country is now running out of options and may just be resigned to accept any resolution set up by the finance ministers in Europe.

Regardless of the refreshingly positive employment figures, the macroeconomic situation in the United States leaves a lot to be desired, and thus the slight increases observed in the past week are not expected to become the norm. Americans are still enjoying some of the best mortgage rates in many decades, and the Federal Reserve is still on track to enact the required monetary policy to ensure low interest rates and a stabilization of the housing market.

Most of the major lenders across the country are offering 30-year fixed rate mortgages between 4.002 percent to 4.50 percent. The current mortgage rates for the 15-year fixed mortgage products stand between 3.25 and 3.50 percent, while a conforming 5/1 Adjustable Rate Mortgage (ARM) can be locked at 3.0 percent in some cases. Competition between the major lenders is heating up in the aftermath of the settlement agreement they recently signed before several state attorney generals. That settlement agreement calls for the banks to reduce principals on existing mortgages with loan amounts higher than the value of the homes, and to produce greater numbers of loan modifications. As a result, some banks are beginning to offer rates lower than 4 percent on 30-year mortgages, hoping to capture the attention of new borrowers.

Some banks are trying to get new customers with 5/1 and 7/1 ARMs with rates lower than 3 percent for borrowers with excellent credit. This is seen as a way to drive customers away from the big banks involved in the settlement agreement. Even though the banks involved in the settlement have not admitted to any wrongdoing, many borrowers are now leery of doing business with them.

The situation in Greece affects the sentiment of institutional investors everywhere, and thus some speculations point to some slight up-ticks in mortgage rates in the coming weeks. Drastic increases are virtually impossible at this point, and the best mortgage rates in the world can still be found in the U.S.