Mortgage rates moved a little lowerby Tim Manni
Perhaps the midterm elections will provide a little shakeup to the economy. As economic conditions remain mostly flat, so do mortgage rates. According to the latest edition of HSH.com’s Market Trends Newsletter:
Mortgage rates are mostly as flat as the economy, and there doesn’t seem to be any strong reason form them to budge much one way other the other, at least not until we get past the forthcoming mid-term elections.
HSH’s overall mortgage tracker — our weekly Fixed-Rate Mortgage Indicator (FRMI) — found that the average rate for 30-year fixed-rate mortgages declined by four basis points (.04%), ending HSH.com’s national survey at 4.58%. Important for first-time homebuyers and low-equity-stake refinances, FHA-backed loans are available at an average rate of 4.27%, while the overall average rate for hybrid 5/1 ARMs was 3.54% for the period. HSH.com’s public data series include rates for conforming, jumbo, and most recently the GSE’s “high-limit” conforming products and so covers much of the mortgage-borrowing public.
The dip in mortgage rates was also accompanied by some “better” news from the housing sector (notice how I didn’t classify it as necessarily “good” news):
…Housing Starts have continued to bounce along the bottom, even if the latest figures were the best since June.
Housing Starts closed September at a 610,000 annualized rate of initiation, better than expectations but in reality little changed from the 608,000 figure seen in August. Single-family starts nudged slightly higher, too, but remain depressed, and permits for future residential construction activity continue to settle back. Although the overhang of foreclosure inventory continues to pressure the nation’s builders, they did display just a little more enthusiasm in October.
The National Association of Homebuilders activity index moved two ticks higher to 16 during the month, the highest figure since June. Sales of single family homes rose by three points, as did expectations for activity over the next six months. Oddly, all this improvement occurred when traffic at showrooms moved just a whisper higher; as well, before you interpret these minor upticks as a sign of impending health, consider that the breakeven point for this indicator is 50, a level we’ve not approached (let alone crossed) in several years. Clearly, a rough road remains ahead of us for housing, and the latest foreclosure mess merely adds more chaos to the equation.
Rates have been at rock-bottom levels for so long; why aren’t they able to do more to stimulate the economy?
Of course, low interest rates remain a key support for housing and the economy, but their effect has limits. Refinancing activity has been pretty fair, but not nearly as solid as you would expect given record-low interest rates and the mini-refi-boom seems to lack durability. Applications for home purchases are languishing, though, and are again trending toward 2010 lows as we approach the traditionally slower fall and winter seasons. The latest data covering new and existing home sales come [this] week, and there is little indication that there will be any substantial change in the persistent weak trend.
CLICK HERE to continue reading the latest issue of our Market Trends Newsletter, “Rates Ease, A Little, Again.”
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.