Mortgage rates find some consistency as summer endsby Tim Manni
This summer was quite an interesting time for mortgage rates. Mortgage rates fell a little more than one-third of a percentage point during the summer, seemingly reaching all-new lows every week. Yet as summer has begun to wind down, so have the declines.
For the last six weeks or so, rates have wandered in a very narrow range and seem to be finding some consistency. According to our latest Market Trends Newsletter, “Provided the economy gets no worse, and there is no return of financial panic, mortgage rates don’t really have much place to go.”
HSH’s overall mortgage monitor — our weekly Fixed-Rate Mortgage Indicator (FRMI) has tracked the market for nearly 30 years. [Last] week, the average rate tipped back by three basis points to a flat 4.75%, touching new record territory. The FRMI’s fifteen-year FRM counterpart — attractive to refinancers — came it at a new record of 4.21%, while its hybrid 5/1 ARM cousin sported a 3.73% initial interest rate. The FRMI includes rates for conforming, jumbo, and most recently the GSE’s “high-limit” conforming products and so covers much of the mortgage-borrowing public.
It would seem that the economic setback of the summer has passed, leaving it its wake a rather higher mountain to climb to get us back to full employment and a robust economy. Forthcoming elections and possibly looming tax increases shortly thereafter only adds to the steepness of the incline we will need to travel.
This week, the Federal Reserve meets again to discuss monetary policy and consider what steps, if any, need to be taken to try to push the economy in the right direction more strongly. No policy action is expected, since the short-term interest rates the Fed directly controls are near zero percent already. Still, participants will have plenty to discuss. For our part, we’ll be keenly eyeing the NAHB index and both new and existing home sales, which are likely to be poor yet again. Since the expiration of the last homebuying tax incentive, conditions have been very weak. Although reportedly not in the cards, we think that another homebuyer tax credit should be on the table, but rather different than the programs previously offered. As always, we welcome your feedback.
Also, if you missed it, you should have a look at our plan to help responsible homeowners who are underwater. Unlike the “FHA Short Refi” idea, the concept doesn’t penalize homebuyers or investors… and there might even be no cost to taxpayers, either. Curious? Read HSH.com’s Value Gap Refinance and be sure to let us know what you think.
Mortgage rates seem likely to continue to wander aimlessly this week.
CLICK HERE to continue reading the latest issue of our Market Trends Newsletter, “Better News: Rates Rise (a little).”
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.