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May 23rd, 2011 (Modified on May 27th, 2011)

Mortgage rates maintain their record lows

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2011-3DLast week was another one among many in which economic indicators lived up to their current, under-performing expectations. This gave way to mortgage rates falling even more, albeit not by much, setting new 2011 record lows.

30-year mortgage rates

According to the latest weekly figures from HSH.com, our weekly Fixed-Rate Mortgage Indicator (FRMI) found that the overall average rate for 30-year fixed-rate mortgages slipped back by just a single basis point, landing at an average of 4.90 percent, a new 2011 low.

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FHA mortgage rates

FHA-backed 30-year fixed-rate mortgages are arguably driving whatever sales of homes which are occurring to first-time homebuyers, and also give low-equity refinancers an option to pursue. Mortgage rates for these products slipped back by four basis points to finish last week at 4.51 percent.

5/1 ARMs

Given the wide differential in interest rates, at least some borrowers should be considering hybrid 5/1 ARMs; whose five-year fixed period now averages just 3.52 percent, down two hundredths of a percentage point from the prior survey week. Certainly, there are savings to be had for borrowers willing to accept some future interest-rate risk.

Refinancing picking up steam

We reported last week that the latest application figures, as measured by the Mortgage Bankers Association, showed a strong uptick in refinancing activity. It seems as though refinancers are finally taking advantage of the opportunities presented by these historically-low mortgage rates. While we hope that this refi trend continues into this week, our hopes are far less vested in the recovery of purchase applications.

Purchases…not so much

So far this year, there has been little indication that home purchases will return in a big way. “That’s clearly seen in the latest report covering sales of Existing Homes, which were sold at an annualized rate of just 5.05 million (annualized) in April, down from an already-sluggish pace of 5.09m for March,” writes HSH.com VP Keith Gumbinger in our latest Market Trends newsletter.

“Prices were down by another 5 percent compared with the year ago period, and the decline of buyers in the market means there are now some 9.2 months of available inventory; about 5-6 months of supply is considered normal, and the excess supply will continue to pressure home prices downward.”

What does the future hold?

Unless inflation begins to create more cause for concern, there’s little indication that economic conditions will change to any great degree, creating increased influence on the direction of mortgage rates. “There doesn’t seem to be anything on the immediate horizon to drive them strongly in one way or the other, so we will probably see very little change in rates again [this] week,” concludes Gumbinger.

Read more…

To learn more about where we think mortgage rates are headed this week and beyond, continue reading our latest Market Trends newsletter, “Mortgage rates hold at 2011 lows.”

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 maintain their record lows”

  1. kentucky loan Says: May 23rd, 2011 at 10:33 am

    Rates in Kentucky are actually a little lower than what the avg in National Survey. I am seeing about 1/8 bps to .25 bps better on rates for FHA

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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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