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January 10th, 2011 (Modified on January 12th, 2011)

Mortgage rates ease slightly

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Percentage Blocks BlueThe latest edition of our Market Trends Newsletter explains that the factors needed to firm as well as raise mortgage rates just aren’t prevalent enough at the moment to keep rates from easing:

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.

Just as we mentioned in our 2011 outlook for the mortgage market, “If you want to know what will happen to mortgage rates in 2011, watch what happens to the economy“:

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.

CLICK HERE to continue reading the latest issue of our Market Trends Newsletter, “Mortgage rates ease slightly.”

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.

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One Response to “Mortgage rates ease slightly”

  1. Mortgagetoday Says: January 11th, 2011 at 5:06 am

    Thanks for posting this article..really helping..

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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.

Our bloggers:

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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