Mortgage rates continue to fall to record lowsby Tim Manni
Mortgage rates fell to record lows once again last week. While it’s certainly not breaking news at this juncture, it goes without saying that with every new venture into record-low territory, at least some qualifying borrowers are getting the opportunity of a lifetime.
Borrowers that purchase or refinance at current mortgage rates may never have to refinance to a lower rate ever again.
Mortgage rates drifted to new record lows 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 (conforming, expanded conforming and jumbo mortgages) decreased by seven basis points (0.07 percent) from the previous week, moving to a new record-low average of 4.42 percent.
The conforming 30-year FRM is sporting a new record low, too. The eight basis point decline last week puts the average at 4.23 percent.
FHA-backed 30-year fixed-rate mortgages, an especially important loan product for first-time homebuyers and low-equity refinancers, have shed a full tenth percentage point, closing the week at just 4.06 percent.
Hybrid 5/1 ARMs might interest a few borrowers since its five-year fixed-rate period slipped by another four basis points last week, now averaging an ultra-low 3.13 percent.
Are these low rates doing us any good?
HSH.com VP Keith Gumbinger explains in the latest issue of HSH.com’s Market Trends newsletter, that for many borrowers, these low mortgage rates only remain an “attractive mirage.”
What good are low mortgage rates if millions of buyers and refinancers don’t have access to them? This remains such an issue that hints of another federal refinance program continue to surface, even from the president himself.
As Gumbinger wrote, HSH.com came up with our own refinance plan exactly one year ago. Think of how many borrowers we could have helped if our Value Gap Refi plan had been in service for a year already?
Low mortgage rates come at a cost
Low mortgage rates come at a cost. In our current environment (and for last few years it seems like), low mortgage rates have come at the expense of an economy teetering on a recession. Sure mortgage rates are at their lowest point ever, but consumer moods are in the toilet, job growth has stalled, unemployment is rampant and the housing market doesn’t have a leg to stand on.
Low rates are going to last a while
Anyone looking for a quick fix for the economic woes will need to keep looking. We are years into this mess at this point, and by some reckonings are in much better shape now, relative to both the depths of the mess and many other countries.
That said, we are or have been in a near stasis for the recovery for six to eight months, and the risk of faltering back into recession is a real one at this moment.
Low interest rates—whether at new record lows or only near them—are likely to be with us for a long while yet as these difficult troubles slowly sort themselves out or otherwise come to resolution.
Expect more of the same this week.