Let’s look at the average mortgage rates reported for the week of 3-30-2013 by the MBA and Freddie Mac. Plus an interesting chart…
First check out this chart from the FHFA showing mortgage rates over the past year:
Yes mortgage rates have been climbing lately. Still there is no doubt that mortgage rates are still very low and this makes buying a home very affordable!
Freddie Mac Reported:
- 30-year fixed-rate mortgages averaged 3.57%
- This is up from last week when it averaged 3.54%
- Last year at this time, 30-year fixed-rate mortgages averaged 3.99%
- 15-year fixed-rate mortgages this week averaged 2.76%
- This is up from last week when it averaged 2.72%
- A year ago at this time, 15-year fixed-rate mortgages averaged 3.23%
Frank Nothaft, vice president and chief economist, Freddie Mac said:
Low and relatively steady mortgage rates are invigorating the housing market. For instance, existing home sales over January and February experienced the strongest two-month pace since November 2009, while new home sales were the strongest since August and September 2008. This strong demand helped push the S&P/Case-Shiller® 20-city home price index (seasonally adjusted) in January to its highest reading since December 2008. Moreover, the number of consumers expecting to purchase a home over the next six months rose to 5.6 percent in March, the second highest share since data was first collected in February 1964, according to The Conference Board.
The Mortgage Bankers Association Reported:
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 3.79% from 3.82%, with points increasing to 0.44 from 0.38 (including the origination fee) for 80% loan-to-value ratio loans. The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) decreased to 3.90% from 3.95%, with points increasing to 0.42 from 0.36 (including the origination fee) for 80% loan-to-value ratio loans.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.51% from 3.53%, with points increasing to 0.43 from 0.31 (including the origination fee) for 80% loan-to-value ratio loans.
The average contract interest rate for 15-year fixed-rate mortgages remained unchanged at 3.02%, with points increasing to 0.42 from 0.36 (including the origination fee) for 80% loan-to-value ratio loans.
The Take Away:
Again we see mixed signals from the MBA and Freddie with one reporting rates increasing and the other reporting rates decreasing. Yet that chart from the FHFA should show you that mortgage rates have been creeping up over the past several months. Will they continue to rise?
And what about the recent report from Ellie Mae that some say makes it appear that credit standards are easing. Sure, the average borrower credit score for a closed loan dropped from 749 in January to 745 in February 2013 according to Ellie Mae. Does that mean there will be more buyers able to take advantage of the still super low mortgage rates?
I hope so since right now is such a great time for those lucky people that are looking to buy a house now. There are things that 3 lenders use for mortgage approvals:
- FICO scores
- Loan to value ratios
- Debt to income ratios (DTI)
Loan to value ratios are 5.2% higher than a year ago. Median FICO scores for all approved loans are down from 750 to 745 but Debt to income ratios are exactly the same as a year ago. Something else you need to be aware of is that mortgages are taking longer to process now. Mortgages took 47 days to close in February 2013, which is longer than the 45 days it took in February 2012.
Now all of this is interesting but you need to remember this is all talking about averages. Either average rates, average amount of time it takes to close a mortgage, etc etc. The key for buyers is to talk to a lender and see exactly what is possible for them.
Sellers need to realize that it may take some time to get a mortgage through underwriting. This is just how things are today. It is not always something to cause a seller to freak out if it takes longer for underwriting than it used to. Some loans take longer, some lenders are able to close a mortgage quicker.
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.