October 10th, 2011

Mortgage rates falling once more



2-percentage-blocksWhile the economic data out this week couldn’t easily be characterized as “great”, the collective tenor of the available reports was arguably the most solid in some time, lending at least a little hope that we will not slide into recession as we close 2011.

This pulled some money out of hiding, and the stock market had a little better time of it for at least the time being. To the extent that things aren’t getting economically worse at the moment suggests that mortgage rates might stabilize at bit. After a small upward blip two weeks ago, mortgage rates sported a small downward blip last week (ending October 7).

Fixed mortgage rates’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, non-conforming and jumbo) decreased by four basis points (0.04 percent) from the week prior, slipping back into new record-low territory and stopping at an average 4.32 percent.

The broad average to 15-year FRMs, popular among refinancers, closed at 3.63 percent for the period.

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FHA mortgage rates

FHA-backed 30-year fixed-rate mortgages, ever-important to first-time homebuyers and low-equity refinancers, managed a five-basis-point fall, easing to another record low of 3.94 percent for the week.

Adjustable mortgage rates

The Fed’s Operation Twist is exerting some influence on short-term interest rates, the kinds which govern ARMs, and rates on most ARMs have ticked up over the last couple of weeks as a result. Hybrid 5/1 ARMs, the most popular kind among adjustable rate products, saw their five-year fixed-rate periods post a four-basis-point rise to finish HSH’s survey at a still-attractive 3.13 percent.

Are rates going to rise?

Probably, but don’t worry.

The improving economic news will tend to put at least some upward pressure on interest rates. The influential 10-year Treasury was solidly over 2 percent by the close of business Friday (10/7/11). Still, even upward pressure on rates will keep them near record lows.

For the moment, though, mortgage rates may tick up a couple of basis points this week. Investor enthusiasm at even a series of “better” economic reports will probably not last, given that all they’ve really confirmed is that things remain pretty lousy, and we’re working in a period of time when lackluster gains seem outsize.

Be sure to read the latest issue of’s Market Trends newsletter in its entirety.

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About the HSH Blog'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 and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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