Mortgage rates steady; do consumers even care?by Tim Manni
At some point down the line when we look back over the last year or so, I believe the resounding (cynical) memory will be that, for the most part, this era of historically-low mortgage rates was wasted on a potential pool of homebuyers and refinancers that either a) didn’t take advantage; or b) couldn’t take advantage of the lowest mortgage rates in decades.
With the mortgage market stuck in a swirl, credit conditions as strict as they are, and economic recovery being as unstable as it is, I wonder if consumers even care all that much about current mortgage rates:
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 rose by three basis points (.03%) to finish the week at 5.11%. A key component of the first-time homebuyer market, FHA-backed 30-year fixed-rate mortgages increased by four basis points to land at 4.76%. ARMs are starting regain at least some favor in the market, and Hybrid 5/1 ARMs, perhaps the most preferred alternative to the traditional 30-year FRM (notably for jumbo buyers) bounced just two hundredths of a percentage point higher (.02%), ending the final week of March at an average of 3.74%.
While granted that February was a month of brutal winter weather and uneven economic recovery, mortgage rates did firm some and potential homebuyers reacted by stepping back. Existing home sales, which represent the largest portion of the marketplace, declined appreciably last month:
Sales of existing homes, the largest portion of the market, declined by 9.6% during the month, sliding to an annualized rate of 4.88 million, the softest pace since last November. With the falloff in sales, and with plenty of inventory still coming into the market from foreclosures and such, there are now 8.6 months of supply available at the present rate of sale, up from a closer-to-normal 7.5 months in February.