Mortgage rates ease slightlyby Tim Manni
HSH.com’s overall mortgage tracker — our weekly Fixed-Rate Mortgage Indicator (FRMI) — found that the overall average rate for 30-year fixed-rate mortgages slipped back by seven basis points (.07%) during the first week of 2011, ending HSH.com’s national survey at 5.12%, the lowest average rate since early December. FHA-backed offers, so crucial to first-time homebuyers and low-equity refinancers, decreased by five basis points to start 2011 at 4.77%, better than a half-percentage point lower than they began 2010. The overall average rate for 5/1 Hybrid ARMs revisited a level seen two weeks ago with an average rate of 3.89%. HSH.com’s FRMI and other public data series includes rates for conforming, jumbo, and most recently the GSE’s “high-limit” conforming products and so cover much of the mortgage-borrowing public.
The economy continues its trend of firming growth, but there are few indications that it is poised to rocket forward. After a late-fall and early-winter rise, mortgage rates have largely leveled off.
The impetus for the rise has been a warming economic tenor after a late-summer swoon. However, in order for interest rates to continue to rise — or even hold these levels — we need to see continued upward progress or growing inflation concerns, or both. At present, we don’t seem to have either of those conditions.
Which direction are mortgage rates headed from here on out?
Mortgage rates appears to have found a new range in which to wander, awaiting clues to push them more strongly in one direction or the other. Given the increasing number of positive reports, upward is the more likely direction of the two, but there is little reason to expect much of that in light of the challenges which yet face the economy. As such, we don’t expect much change in mortgage rates for next week.
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