Mortgage rates in the Fort Wayne area have returned to near historic lows set last spring — good news for prospective homebuyers.

Rates on an FHA or conventional 30-year mortgage were at about 5.625 percent at the end of last week, said Deborah Sturges, senior vice president at Fort Wayne-based Waterfield Mortgage Co.

Rates here and across the country were at their lowest in April, and then rose above the 6 percent mark as summer approached.

Freddie Mac, in its weekly survey released Thursday, reported that rates on 30-year, fixed-rate mortgages dropped to an average of 5.75 percent nationwide for the 7-day period ending Sept. 16. That was down from 5.83 percent the previous week and marked the lowest rate on 30-year mortgages since the beginning of April.

Rates on 30-year mortgages hit a high this year of 6.34 percent the week of May 13, Freddie Mac reported, and then slowly drifted downward as economic activity cooled in the late spring.

The Federal Reserve’s action to boost short-term interest rates twice earlier this year may also have contributed to the decline in mortgage rates, which are more closely tied to long-term bond rates and tend to move in the opposite direction of short-term borrowing costs.

The Federal is expected to boost short-term interest rates next week by one-quarter percentage point to 1.75 percent, which would mark its third rate increase this year.

Freddie Mac’s chief economist, Frank Nothaft, said he didn’t see such an increase as “having a significant impact on long-term mortgage rates.”

Locally and nationally, there are even lower-rate options for borrowers who can make the larger monthly payments that go with 15-year fixed-rate mortgages. Also a popular option for refinancing, the 15-year rates decreased last week to 5.13 percent, Freddie Mac reported. The 15-year rates locally are at about 5 percent, Sturges said.

The Mortgage Bankers Association said refinancing accounted for 43.2 percent of all home mortgage applications filed last week, up from 41.4 percent the previous week.

For buyers who don’t expect to be in their homes for a long time, interest-only mortgages have become very popular, Sturges said.

“If you are only going to be in a house for three years, the amount of principal you will be paying is minimal, so the interest rate you are paying on these loans makes them very attractive,” Sturges said.

Currently, the rate on a three-year adjustable, interest-only loan is about 4.25 percent, while the rate on a five-year adjustable, interest-only loan is 4.75 percent, she said.

Many mortgage lenders currently offer conventional loans, to qualified buyers, with little or no down payment. Lenders offering the interest-only loans may require a little more, perhaps in the neighborhood of 10 percent, as a down payment, Sturges said.

The basic requirements are the same, however. “As long as you have jobs and a demonstrated ability to pay debt, you can get a mortgage,” Sturges said.

Adjustable rate mortgages may also be appropriate for those who need to shave their initial payments or who plan to say in a home for a shorter period. Currently, three-year adjustable rates are at 4.625 and seven-year balloon mortgages are at 4.875 percent.

“Back 10 years ago, we didn’t ever think we would see rates in the fours and fives,” Sturges said.

Freddie Mac’s nationwide averages for mortgage rates do not include add-on fees known as points. The 30-year mortgage and 15-year mortgages each averaged carried a 0.8 point fee. One-year ARMs carried an average 0.7 point.

Although it varies by lender, loan type and loan size, typically, insurance, taxes and other items add up to about $2,000 in closing costs, Sturges said.

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