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August 3rd, 2009

Firmer Rates As “Pace of Decline Moderates”

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According to the latest issue of HSH’s Market Trends Newsletter, “Firmer Rates, Barely,” mortgage rates are hovering in the middle of the range they have been in for some time now. Since economic conditions are neither completely bleak or steadily improving, rates are “waiting to see where [they] go from here.”

“Subtle signs of economic improvement are gaining in number and frequency, but it’s all too easy to confuse a move back toward flatline growth as actual recovery, or to conclude that a rising trend is wholly sustainable. While we’re encouraged by the momentum away from emergency panic levels, risks to any nascent economic recovery remain, and real improvement is still in our future.”

“The Federal Reserve’s report on regional economic conditions, known as the ‘beige book’ for the color of its cover, reflected those risks in the summary which accompanies the release. Overall, while the tenor of the report was somewhat warmer than the last couple, about the best they could muster was that ‘most Districts indicated that the pace of decline has moderated.’ None noted any uptick in activity, but four of the twelve regions saw signs of stabilization, albeit at lower levels of activity. That said, there were some spotty improvements noted in residential real estate, and improved optimism about manufacturing. Those were offset by worsening commercial real estate markets and very weak labor markets.”

“Hopes for fast improvement and concerns about inflation drove mortgage rates from low levels in late spring to highs which proved unsustainable, given the continuing recession. As the picture isn’t bleak enough to foster runs down to those winter and spring levels, we’ve instead settled back into a middle range between those two extremes, waiting to see where we go from here.”

“As such, mortgage rates have been flat now for about a month, with a modest upward bent. The overall average for 30-year fixed-rate mortgages, measured by HSH’s Fixed-Rate Mortgage Indicator (FRMI), rose by three basis points (.03%) this week, landing at 5.73%. The FRMI’s counterpart for hybrid 5/1 ARMs notched a two-basis-point increase, ending the survey week at 5.14%. The average conforming 30-year FRM moved four basis points higher, still squarely in the middle of the high/low range seen during the April-mid June period.”

Click here to continue reading “Firmer Rates, Barely.” 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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