Checking in the average mortgage rates reported by the MBA, Freddie Mac and Bankrate for the week ending 2-7-2014…
Happy Friday everyone! Time to check in on the average mortgage rates for this week and look at some of the recent news that could impact rates:
Freddie Mac Reported:
- 30 year fixed rate mortgages averaged 4.23%
- This is down from last week when it averaged 4.32%
- Last year at this time, 30 year fixed rate mortgages averaged 3.53%
- 15 year fixed rate mortgages averaged 3.33%
- This is down from last week when it averaged 3.40%
- Last year at this time, the 15 year fixed rate mortgages averaged 2.77%
Check out the chart showing mortgage rates from Freddie Mac:
Frank Nothaft, vice president and chief economist, Freddie Mac said:
Mortgage rates fell further this week following the release of weaker housing data. The pending home sales index fell 8.7 percent in December to its lowest level since October 2011. Fixed residential investment negatively contributed to GDP in the fourth quarter for the first time since the third quarter of 2010. Also, the Institute for Supply Management reported a significant slowing in growth in the manufacturing industry in December than the market consensus forecast.
This statement came before today’s crap-tacular jobs report. More on that further down…
30 year fixed rate mortgages fell 7 basis points to 4.43%
15 year fixed rate mortgages also fell 6 basis points to 3.5%
The average rate for a 30 year jumbo mortgage fell 7 basis points to 4.47%
Bankrate.com also points to “economic concerns in the US and abroad” as the cause for another drop in rates.
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 4.47% from 4.52%, with points decreasing to 0.25 from 0.40 (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) decreased to 4.42% from 4.47%, with points decreasing to 0.11 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 decreased to 3.53% from 3.59%, with points increasing to 0.28 from 0.26 (including the origination fee) for 80% loan-to-value ratio (LTV) loans.
The MBA is reporting that 62% of mortgage activity is from refinances. Which means more people are refinancing than buying. Good to see home owners taking advantage of the historically low rates.
The Take Away:
Another week of dropping mortgages rates. So much for the predictions about rates rising in 2014….
Or is this the quiet before the storm?
You may remember that I posted about the Fed once again cutting back on Quantitative Easing. There is no doubt that the financial markets have been in turmoil recently. For now, this turmoil may be part of the reason for rates dropping.
Another reason we may see rates remain low is the recent crappy employment reports…
Weak Employment Numbers from BLS for January
These reports contradict the latest report from ADP which said January 2014 total employment is 1.9% better than January 2013. Despite the BLS reporting that unemployment hit a new 5 year low at 6.6%, there is no doubt that hiring was weak.
Which causes people to doubt the strength of the economic recovery. And is also part of the reason why mortgage rates have remained so low.
Besides the real number to watch is the U-6 employment rate:
U-6 shows the full number of people not working. As the chart shows, we still have a long way to go. So when you hear about improvements in the jobless rate, remember it does not include everyone that is not working. From people that have given up on finding a job to the ever increasing number of retiring baby boomers, there are plenty of people not working.
Again we heard about the bad weather being one of the reasons for the crappy jobs numbers. I am sure that is part of the problem but it is not the main reason.
But What Does This Mean for Real Estate and Mortgage Rates?
As long as the economy continues to remain weak, rates should stay low. Which is great for buyers and sellers alike.
Of course, there are no guarantees.
Despite the weak economy, home buying conditions are still very favorable. The current weak economy may be causing some people to wait.
Which is a Shame
- Mortgage Rates Are Still Super Low
- Home Prices Are Still Below the Peak
I am not going to say buying a home is the right thing for everyone to do right now. I am just saying that IF you are in the position that buying makes sense, it is a good time.
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.