Checking in on the average mortgage rates reported by the MBA and Freddie Mac the week ending 11-8-2013…
I have been slacking on posting since I have been busy as heck this week. However, I knew I had to get the weekly update about mortgage rates up today since it and the weekly Market Snapshots seem to be the most visited posts. Several reports came out this week that are going to have an impact on rates so I discuss these also. Let’s dive in!
Freddie Mac Reported
- 30-year fixed-rate mortgages averaged 4.16%
- This is up from last week when it averaged 4.10%
- Last year at this time, 30-year fixed-rate mortgages averaged 3.40%
- 15-year fixed-rate mortgages this week averaged 3.27%
- This is up from last week when it averaged 3.20%
- Last year at this time, 15-year fixed-rate mortgages averaged 2.69%
Check out the chart from Freddie Mac showing the average mortgage rates:
Frank Nothaft, vice president and chief economist, Freddie Mac said:
Fixed mortgage rates rebounded slightly this week on more positive economic data releases. Production in the manufacturing industry expanded for the fifth month in a row in October to the strongest pace since April 2011. Similarly, the non-manufacturing sector grew for the second consecutive month in October and beat the market consensus forecast of a decline.
I will discuss the latest positive news for the economy later. First let’s see what…
The Mortgage Bankers Association Reported:
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.32% from 4.33%, with points increasing to 0.42 from 0.26 (including the origination fee) for 80% loan-to-value ratio (LTV) loans.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) increased to 4.37% from 4.36%, with points decreasing to 0.26 from 0.27 (including the origination fee) for 80% loan-to-value ratio (LTV) loans.
The average contract interest rate for 15-year fixed-rate mortgages increased to 3.44% from 3.42%, with points remaining unchanged at 0.30 (including the origination fee) for 80% loan-to-value ratio (LTV) loans.
The Mortgage Bankers Association also reported this week that the number of delinquent mortgages and foreclosures has plummeted. Which is great news for the real estate market and home prices. We have lived through several years of high foreclosure numbers that had a negative effect on home prices.
The bad thing is that according to the MBA, home prices in most parts of the US are still below 2007 levels. And they say that roughly 3/4 of all seriously delinquent mortgages were originated in 2007 or earlier. So if something bad happens to these home owners, they are still underwater despite the improvement in the economy and recently rising home prices.
The Take Away:
Looks like another week of increasing rates. Almost all of the rates reported by Freddie Mac and the MBA increased. I would like to say this is just a odd blip and buyers can relax. However as the economy improves, we can expect mortgage rates to increase. So that is why several reports that came out this week may mean we are going to see higher rates in the coming weeks.
The biggest good news for the economy was that GDP grew faster than expected in the 3rd quarter. The BEA reported GDP as only 2.8% which is below the historical average. But it is higher than the previous 3 quarters which means the economy is improving. Like I said before, an improving economy usually means higher mortgage rates.
The next bit of news for the economy was the Bureau of Labor Statistics Non-Farm Payrolls report, also known as the “jobs report”. The number of jobs added rose but somehow the unemployment rate increased to 7.3%. Job growth means the economy is growing, and a growing economy means higher mortgage rates.
Also we have to remember that the Federal Reserve is watching the unemployment rate to determine when they will start to taper Quantitative Easing. We might not know when the Fed will start to taper but we DO know that when they do, mortgage rates will rise.
While I think the Fed will stand firm on not starting to taper until unemployment reaches 6.5%, we really never know what the Fed or the idiots in DC are going to do next. Heck we never really know what tomorrow holds. We can only look at what we know…
If we look at what we know, it is that home prices are still at 2007 levels in most areas. Which means it is very possible for buyers to still get a great deal.
Also looking at what we know, we see mortgage rates that are still historically low. Sure they may be rising but they are much much lower than they have been in the past.
So just like I said last week:
If buying a home now makes sense for you, I would say you are looking at some great home buying conditions!
As always, I am providing this to you for informational purposes only! I am not a mortgage lender and you should contact the lender of your choice directly to learn more about its mortgage products and your eligibility for such products.