As anticipated, mortgage rates back on the declineby Tim Manni
Federal Reserve Chairman Ben Bernanke confirmed last week that while the Fed would continue to keep a close eye on the markets, their plans for ending their extraordinary supports from the market would continue as planned, despite current economic conditions.
Bottom line: While the soft economy may not bode well for GDP growth, it continues to provide great opportunities for homebuyers and refinancers.
As we anticipated, mortgage rates declined overall last week:
HSH.com’s broad-market mortgage tracker—our weekly Fixed-Rate Mortgage Indicator (FRMI)—found that the overall average rate for 30-year fixed-rate mortgages declined by 11 basis points, moving to an average of 4.77 percent.
FHA-backed 30-year fixed-rate mortgages, especially important to first-time homebuyers and low-equity refinancers, shed eight basis points to close the week at 4.44 percent.
Looking for an even lower mortgage rate?
At least some of you should be considering hybrid 5/1 ARMs given their wide differential in interest rates. The five-year fixed period now averages just 3.39 percent, down eight hundredths of a percentage point from the week prior.
How much can an ARM save you?
A borrower with a $300,000 loan, willing to accept the risk of higher future payments, would save about $20,000 over the next five years. Borrowers should stockpile those savings to help offset some of the future price changes, or bank the savings and refinance into a new fixed-rate product after the five years is up.
Will mortgage rates continue to fall this week?
“As long as there are domestic and international troubles so fully in play, a sustained or sustainable rise in interest rates seems unlikely,” writes HSH.com VP Keith Gumbinger in the latest issue of our Market Trends newsletter.
“The welcome dip in mortgage rates [last] week halted the minor rise which really only lasted about a week. We are still a little above June bottoms, and will remain there [this] week, when mortgage rates will probably nudge up a couple of basis points.”
To learn more, please read our latest Market Trends newsletter titled, “Mortgage rates slip back.”