Looking at the average mortgage rates reported by the MBA, Freddie Mac and Bankrate for the week of 5-31-2014 plus the latest information from the FHFA…
Wondering if mortgage rates increased this week? While finding out exactly what is possible for you means talking to a lender, we still need to keep an eye on the average mortgage rates reported by the MBA, Freddie Mac and Bankrate.com. Plus this week I have the latest information from the FHFA along with my summary of what this all means!
Freddie Mac Reported:
We got good news from Freddie as they reported that mortgage rates had decreased for the 5th week in a row! Frank Nothaft, vice president and chief economist, Freddie Mac said:
Fixed mortgage rates eased a bit for the fifth consecutive week as reports that existing home sales are up 1.3 percent but not as much as expected. However, new home sale rose 6.4 percent in April to a seasonally adjusted annual rate of 433,000, which followed an upward revision of 11,000 units for the prior two months.
Also, as the spring home buying season continues, we see stronger consumer confidence as house prices remain on the rise. The Conference Board reported that confidence among consumers rose in May after dipping in April. Meanwhile, the S&P/Case-Shiller 20-city composite index rose 0.9 percent in March, above the consensus forecast.
Check out the chart showing mortgage rates from Freddie Mac:
The 30-year fixed rate mortgage fell 4 basis points to 4.25%
The 15-year fixed rate mortgage fell 3 basis points to 3.35%
The average rate for a 30-year jumbo mortgage fell 2 basis points to 4.29%
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 4.31%, the lowest level since June 2013, from 4.33%, with points decreasing to 0.15 from 0.20 (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 4.23%, the lowest level since June 2013, from 4.24%, with points increasing to 0.16 from 0.09 (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 3.42%, the lowest level since October 2013, from 3.43%, with points decreasing to 0.06 from 0.15 (including the origination fee) for 80% loan-to-value ratio (LTV) loans.
Earlier this week, the Federal Housing Finance Agency (FHFA) released their latest report on mortgage rates. The data from FHFA is not as up to date as the reports from Freddie, the MBA and Bankrate.com. Still it is good to use for a “big picture” type of view of what is happening.
FHFA said that the National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders index was 4.24% for loans closed in late April. The index is calculated using FHFA’s Monthly Interest Rate Survey. The contract rate on the composite of all mortgage loans was 4.23%, a slight increase from 4.22% in March.
Check out the chart from FHFA:
The Take Away:
I would tend to disagree with Nothaft that mortgage rates dropped because home sales were lower than expectations. I think the decrease is because people think the European Central Bank could lower their rates.
Sadly, low mortgage rates may be temporary according to Mark Zandi, chief economist for Moody’s Analytics. Check out this quote from him in a recent Bloomberg article:
It’s a temporary window of opportunity for buyers in that a year from now rates will be higher. The housing market could use it given how it’s gone sideways. But I wouldn’t count on these low rates for very long.
I am sure you have heard all the other predictions that both mortgage rates and home prices will increase this year. For now, decreasing mortgage rates are offsetting the rising home prices.
How long mortgage rates stay at the historically low levels is hard to say.
No one can predict the future. Considering that rates can rise quickly and dramatically, I would suggest that anyone thinking about buying a home get the ball rolling now. Take that first step and talk to the lender of your choice.
Hesitating will cost buyers more money since home prices are still rising. If mortgage rates start to climb also, that is a double whammy that could really put a hurting on the housing market.
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.