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March 7th, 2011

Mortgage rates fall back slightly

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int rate QMarkMortgage rates managed another drop last week as the push and pull of economic recovery and global events continue to weigh on the markets. Yet for the moment, the Fed’s plan seems to be succeeding at keeping interest rates low:

The Fed’s economic tonic — low interest rates and plenty of liquidity — does seem to be having the long-awaited desired effect of boosting growth to more self-sustaining levels. As Spring fast approaches, so does hope for a recovery expanding in breadth and depth. How long these policies can be maintained without fueling inflation remains to be seen, but the Fed maintains that they will be able to effectively deal with it when it returns. Fed Chairman Bernanke said as much in his testimony before Congress this week: “We have all the tools we need to achieve a smooth and effective exit at the appropriate time.”

Mortgage rates fell by just a handful of basis points last week:

HSH.com’s overall mortgage tracker — our weekly Fixed-Rate Mortgage Indicator (FRMI) — noted that the overall average rate for 30-year fixed-rate mortgages eased again by five basis points (.05%) starting March at an average 5.18%. A key component of the first-time homebuyer market, FHA-backed 30-year fixed-rate mortgages slipped a little less, declining by three basis points to land at 4.81% for the week. Hybrid 5/1 ARMs, often the most viable alternative to the traditional 30-year FRM (especially for jumbo buyers) split the decline of those two products, losing four hundredths of a percentage point (.04%) to close the period at 3.87%.

Despite the easing we saw in mortgage rates last week, and over the last few weeks for that matter, the future outlook is still one of rising rates:

The drift downward in interest rates over the last few weeks, a cumulative move of better than an eighth percentage point on average, represents an opportunity for those in process to grab a slightly lower interest rate, and perhaps a reason for some potential homebuyers to step into the market ahead of the Spring homebuying season. There is a lighter economic calendar next week, but we’ll see some important reports on Consumer Credit, Retail Sales, Inventories and trade to move the markets around. If the nudge higher in underlying interest rates at [last] week’s end was any indication, the decline in rates may halt next week, and we might take back this week’s small dip.

Click here to continue reading “Lower Rates and Economic Optimism.”

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!

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One Response to “Mortgage rates fall back slightly”

  1. Trendy Tuesdays – Of Mortgage Rates & Beige Books · Pall Spera Company Realtors Blog Says: March 8th, 2011 at 1:50 pm

    [...] HERE to read the full HSH.com [...]

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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.

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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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