Looking at the average mortgage rates reported by the MBA, Freddie Mac and Bankrate.com for the week of 3-21-14 and what this week’s economic news means…
Another week has flown by and that means it is time to look at the average mortgage rates reported by the MBA, Freddie Mac and Bankrate.com. And to look at some recent economic and real estate news and what it means for mortgage rates.
Freddie Mac Reported:
- 30-year fixed rate mortgages averaged 4.32%
- This is down from last week when it averaged 4.37%
- Last year at this time, 30-year fixed rate mortgages averaged 3.54%
- 15-year fixed rate mortgages averaged 3.32%
- This is up from last week when it averaged 3.38%
- Last year at this time, 15-year fixed rate mortgages averaged 2.72%
Now check out the chart showing mortgage rates from Freddie Mac:
Frank Nothaft, vice president and chief economist, Freddie Mac said:
Mortgage rates eased this week as housing starts declined 0.2% in February to a seasonally adjusted annual rate of 907,000, below consensus forecast. The rate on the 10-year treasury note rose following the Fed’s announcement Wednesday afternoon and, if this holds, interest rates may begin to trend higher going into next week.
More about the Fed statement later…
30-year fixed rate mortgages fell 4 basis point to 4.46%
15-year fixed rate mortgages fell 3 basis points to 3.48%
The average rate for a 30-year jumbo mortgage fell 8 basis points to 4.46%
The Mortgage Bankers Association Reported:
The average contract interest rate for 30-year fixed rate mortgages with conforming loan balances ($417,000 or less) increased to 4.50% from 4.52%, with points decreasing to 0.26 from 0.29 (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 4.39% from 4.41%, with points decreasing to 0.19 from 0.20 (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 3.52% from 3.53%, with points decreasing to 0.25 from 0.28 (including the origination fee) for 80% loan-to-value ratio (LTV) loans.
The Take Away:
I am sure the slight decrease in rates is going to make plenty of people happy. But will their happiness be short lived?
Earlier this week we heard from the FOMC that the Fed is once again cutting back on QE or Quantitative Easing. Beginning in April, the Fed will cut back on their purchases of mortgage-backed securities by another $5 billion and will cut their monthly purchases of Treasury securities by another $5 billion.
This was expected but it was Yellen’s press conference that set Wall Street off. It probably shouldn’t have but it did. Yellen’s comments were pretty much in line with previously released projections. Still mortgage rates worsened after this news.
However, this week’s news about NAR’s Existing Home Sales and the weak Housing Starts numbers may counter the Fed cutting back further on QE.
The key thing for everyone to remember is that mortgage rates are still at historically low levels.
The average mortgage rates may increase or decrease but remember these are the AVERAGE rates. Some people may qualify for a much lower rate. Other people may have to pay more than the average. The only way to find out what is possible is by talking to a mortgage lender.
Look at the chart above from Freddie Mac and notice how rates have bounced up and down for the past 6-8 months. Yes we have all heard that mortgage rates are going to increase in 2014. But for now, rates are still historically low.
Higher Mortgage Rates + Higher Home Prices = Pay More
Why more buyers aren’t taking advantage of the low rates is something that puzzles me. Especially since home prices are still increasing. It appears that the longer people wait, the more they will have to pay for a home.
I know the economy is still weak. And lots of people are out of work. And median income is stagnant.
But this does NOT change the fact that there is a great opportunity for home buyers today.
I am not saying that everyone should run out and buy a home. Or that someone buying a home should spend as much as they possibly can.
If buying a home makes sense for you, then you need to understand that it is still a good time to buy a home.
And you need to understand that this opportunity may not last forever.
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.