Home loans are still quite a bargain. Just not the exceptional bargain they were late last year.
The average cost of 30-year, fixed-rate mortgages, the most popular way to finance a home, is up a quarter of a point since reaching a record low in early December.
The average cost of a 15-year mortgage, which is very popular with borrowers looking to refinance a home, is about a tenth of a percent more than last fall.
Have mortgage interest rates bottomed out?
It's too soon to say. But here's what we do know.
Most mortgages are sold to investors through two government-owned companies called Fannie Mae and Freddie Mac. Because of that, mortgage rates usually rise and fall in sync with the returns on long-term Treasury bills.
The Federal Reserve remains committed to holding long-term interest rates at historic lows until our lethargic economy is growing faster and creating more jobs.
But investors seem to be shaking the bunker mentality of the past few years that had them piling into safe assets such as Treasuries no matter how pitiful the returns might be.
Money is flowing back into stocks, which is why the Dow Jones Industrial Average and S&P 500 ended the first quarter at record highs.
The return on 10-year Treasury bonds fell to a record low of 1.38% in July, then rose to surpass 2% for the first time in nine months in late January, before falling back to end the first quarter at 1.85%.
What does this tell us about mortgage rates as the spring and summer unfold?
The Fed will be able to hold interest rates down, put probably won't be able to replicate the record lows we saw in late 2012.
Savvy borrowers with decent credit can expect to pay a quarter to half of a point less than these average rates.
Search our extensive database of the best interest rates offered by hundreds of lenders for better-than-average deals.
Where you live will have a lot to do with how much you pay.
The cheapest 30-year loans are in Kansas City (3.64%), closely followed by Detroit (3.65%) and Phoenix (3.67%).
The most expensive loans are in Tampa, where the average rate is nearly three-quarters of a point higher at 4.35% and Denver (3.97%).
Click here to find the average rates for all 25 major cities we track. You’ll find the data for 30- and 15-year fixed-rate loans and 5/1 adjustable-rate mortgages (ARMs).
Rates this low mean the payments for principal and interest for the average 30-year loan are a very affordable $464 per month for every $100,000 borrowed.
Use our mortgage calculator to see what your monthly principal and interest payments would be on any fixed-rate loan.
How long we'll enjoy such low rates depends on the Federal Reserve.
In September, the Fed’s policy-making committee announced plans to buy $40 billion of mortgage debt a month for the foreseeable future.
When the Fed buys bonds backed by thousands of home loans, it essentially floods the market with money, pushing down the cost of financing a home.
Although the Fed has purchased $2 trillion dollars’ worth of government and government-backed mortgage debt since the financial crisis hit in 2008, it’s never had an open-ended commitment like this.
It always spelled out exactly how much it was going to spend and when those purchases would take place.
At the December meeting of the Open Markets Committee, the governors appeared to be evenly split on whether the Fed would continue buying bonds until the end of 2013 or stop sooner than that.
Minutes of their January meeting said "many" members are now concerned at the higher-than-expected pace of purchases — about $85 billion a month — and the amount of debt the bank has accumulated — more than $3 trillion.
Those records say an "ongoing evaluation of the efficacy, costs and risks of asset purchases might well lead the committee to taper or end its purchases before it judged that a substantial improvement in the outlook for the labor market had occurred."
That's the first indication that the committee could be wavering on its September commitment — and something for anyone planning to buy or refinance later this year must watch.
When the Fed stops buying, you'll almost certainly pay more for a mortgage.
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