Mortgage Rates Fall to Record Lows, Old News?by Tim Manni
If you were following us last week you would have read that mortgage rates once again fell to record lows. How low? We’re talking the lowest levels in 54 years. On Thursday of last week, the 30-year Conforming fixed rate rang in at 4.69%, a figure last seen in 1956.
“There was a time when ultra-low mortgage rates would create a cascade of activity, 40-point headlines, and a bombardment of lender phones — a crush of volume that would overwhelm lender staffs,” according to the latest issue of HSH.com’s Market Trends Newsletter.
However, that increase in activity and those headlines seem to have come and gone from today’s market. When mortgage rates fall to new lows seemingly every week, you really can’t blame perspective buyers and refinancers, even news editors for not jumping at the news.
This week’s Market Trends refers to last week’s rates as “‘technical’ lows — really, just a few basis points down from already-record-low territory.”
The fact is that there just isn’t enough pent-up demand to produce much new activity. At best, the ‘window of refinancing opportunity’ has merely widened a little bit any may now include folks presently holding mortgages with rates in the 5.75% range or so.
Purchasers are of course interested in low rates, but affordable rates are only one consideration when deciding to buy a home.
Let’s take a look at rates across the board:
HSH’s overall gauge, our Fixed-Rate Mortgage Indicator (FRMI) includes rates for conforming, jumbo, and the GSE’s “high-limit” conforming products and so includes a broad swath of the mortgage-borrowing public. [Last] week, the FRMI fell by another four basis points, closing the first week of Summer at 5.07%. The ‘best’ alternative to the 30-year FRM for many folks, especially jumbo borrowers, is the hybrid 5/1 ARM, which finished the week at an attractive 4.12%.
Conforming 30-year fixed, the benchmark mortgage product, stands at 4.77% with 0.21 points on average. This suggests that borrowers should easily be able to find zero-point rates not higher than 4.875%, and possibly no-fee deals at 5% or thereabouts. Based upon available research, which provides useful but not direct comparisons, we reckon the conforming 30-year FRM to be at levels unseen since May 1956.
For big-balance borrowers, private-market jumbo 30-year FRMs are very close to record low levels, too, at an average 5.60%.
Find out what’s in store for this week: CLICK HERE to continue reading “Rates Like ‘56.”
HSH.com’s free Market Trends Newsletter, an in-depth analysis of various financial markets from the week prior, is published every Monday. Email subscribers receive it in their inbox 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.