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January 12th, 2009

Mortgage Rates May Crack 5% This Week

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According to the January 9 issue of HSH’s Market Trends Newsletter, Mortgage Rates Easing, May Crack 5%, “As long as lousy economic news continues to blare from headlines and televisions, mortgage rates will have at least some downward pressure. And, in fact, the average 30-year fixed might just fall below 5% this week.

Conforming rates led the downward charge this [past] week — the daily average for a 30-year conforming FRM landed at 5.05% on Friday, besting the previous daily low of 5.06% seen on December 17 — but jumbo rates are trending downward, too, with the average 30-year Jumbo FRM now standing at 6.82%, the lowest such rate since nearly a year ago.

Some of the influence on mortgage interest rates came as the Fed began its previously announced program to buy up mortgage-backed securities in the open market place. Reports indicated that the Fed picked up some $10 billion worth of MBS to start the year, lending some support to the market. It also appears that some investors have shed their protective positions in Treasuries in favor of slightly riskier investments, if the 25-basis point rise in the 10-year yield since the year’s beginning (while mortgage rates have declined) is any indication.

Conforming rates may actually crack the 5% mark next week. Lenders are already creaking under the strain of a crush of activity which will grow even if rates remain above that level.”

For more of a long-range view of potential market activity, please be sure to read our Two-Month Forecast for Mortgage Rates.

Click here to read the rest of “Mortgage Rates Easing, May Crack 5%.” HSH’s free weekly Market Trends Newsletter, an in-depth analysis of various financial markets of the week prior, is published every Monday. Email subscribers receive it in your inbox by Friday night, so sign up today! Also, be sure to check in with our Market Trends blog for all news relating to any weekly shift in mortgage rates.

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About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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