Mortgage rates hit new 2011 lowby Tim Manni
With another week in the books, it is even more evident how closely the movement of mortgage rates is tied to our nation’s economy. A few months back, it seemed as though by now inflation would be a major indicator that would influence the direction of mortgage rates.
While that may still be true looking forward, for the time being, the nation’s economy can’t seem to catch a break, further pressuring mortgage rates down to a new 2011 low last week.
According to the latest figures from HSH.com, mortgage rates tumbled even more last week:
HSH.com’s broad-market mortgage tracker—the weekly Fixed-Rate Mortgage Indicator (FRMI)—found that the overall average rate for 30-year fixed-rate mortgages fell by six basis points last week, landing at an average of 4.75 percent.
FHA-backed 30-year fixed-rate mortgages are arguably driving sales of homes to first-time homebuyers, and also give low-equity refinancers an option to pursue. Rates for these products decreased by three basis points to finish the week at 4.41 percent.
Hybrid 5/1 ARMs, whose five-year fixed periods now average just 3.36 percent, was down six hundredths of a percentage point from the week prior. Granted, there are future interest-rate risks associated with this product and those like it, but there is also significant saving to be had for borrowers willing to accept those risks.
New from HSH.com: “ARMs do not look so scary anymore“
Even though there is a full slate of economic news on tap for this week, including the Producer and Consumer Price indexes, Retail Sales, Housing Starts and Builder Sentiment, LEI and a number of others, most or all cover the May period, and it is unlikely that we will see any major surprise improvements in any of them.
Mortgage rates have probably fallen about as much as they are going to fall for at least the moment, that’s why we believe there will be little to no change in the averages this week.
Over the next couple of months, well, that’s a different story. For a mortgage rate outlook which will take you through the next two months, be sure to review our new “Two-month forecast for mortgage rates.”