Looking at this weeks average mortgage rates reported by the MBA, Freddie Mac and Bankrate and why rates have dropped despite predictions they would rise…
I normally post my weekly update about mortgage rates on Friday but I am going to try to start posting on Saturday instead. A little reminder before I jump into this week’s update that Sunday is Mother’s Day. A big thank you goes out to all the Mothers out there! It is the world’s toughest job and you really should be celebrated every day!
And now let’s check the average mortgage rates reported by the MBA, Freddie Mac and Bankrate.com for this week!
Freddie Mac Reported:
- 30-year fixed-rate mortgages averaged 4.21%
- This is down from last week when it averaged 4.29%
- Last year at this time, 30-year fixed-rate mortgages averaged 3.42%
- 30-year fixed-rate mortgage rates are at the lowest level since November 7, 2013
- 15-year fixed-rate mortgages this week averaged 3.32%
- This is down from last week when it averaged 3.38%
- Last year at this time, 15-year fixed-rate mortgages averaged 2.61%
Check out the chart showing mortgage rates from Freddie Mac:
The 30-year fixed-rate mortgage fell 7 basis points to 4.37%
The 15-year fixed-rate mortgage fell 6 basis points to 3.45%
The average rate for a 30-year jumbo mortgage fell 6 basis points to 4.39%
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 4.43%, the lowest rates since November 2013, from 4.49%, with points decreasing to 0.21 from 0.38 (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 4.29%, the lowest rate since June 2013, from 4.37%, with points remaining unchanged at 0.14 (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 3.52% from 3.53%, with points decreasing to 0.22 from 0.31 (including the origination fee) for 80% loan-to-value ratio (LTV) loans.
The Take Away:
After we kept hearing predictions that mortgage rates were going to rise this year, it appears that many of the predictions were wrong. Despite fears that mortgage rates would rise as the Federal Reserve cut back on Quantitative Easing, rates are still at historically low levels.
Why Have Mortgage Rates NOT Increased?
It appears that investors are looking for somewhere safe to put their money. The first time that the Fed mentioned cutting back or “tapering” Quantitative Easing (QE), mortgage rates rose very quickly. Yet this has not really happened this time.
The reason why could be that many foreign central banks are increasing their purchases of US Treasuries. In the first 2 months of 2014, foreign investors have purchased almost a third of the amount that they purchased in 2013.
Another reason that mortgage rates have not increased is the crappy GDP numbers. Frank Nothaft, vice president and chief economist, Freddie Mac said:
Mortgage rates continued moving down following the decline in 10-year Treasury yields after a dismal report on real GDP growth in the first quarter.
The continued unrest in the Ukraine could also be another reason that mortgage rates are not increasing.
We did end the week with a somewhat positive jobs report. Normally a strong jobs report means that rates will increase. The question is whether a strong jobs report will overcome the factors that seem to be holding rates down.
I must point out that these are just the average rates. What is possible for one person is going to be different for some one else.
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.