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November 2nd, 2011

Mortgage rates expected to fall even more

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falling ratesWhile mortgage rates only managed a small decline last week, they’re expected to fall even more as the week progresses.

According to the latest weekly mortgage rate report from HSH.com, rates on two of the most popular types of mortgages dipped the week ending November 1. There are a couple reasons why we expect low mortgage rates to continue.

Mortgage rates should decline further

“While mortgage rates are pretty steady so far [the week ending Nov. 1], there are several reasons to expect them to decline somewhat by week’s end,” predicted Keith Gumbinger, vice president of HSH.com.

“It would appear that the Greek bailout plan isn’t going very smoothly, causing nervous investors to plow money back into Treasuries, which drives down rates,” Gumbinger said. “Couple that with a Federal Reserve which seems to be leaning toward additional future support for the mortgage market, and mortgage interest rates will have a hard time holding these levels.”

The Fed announced on Wednesday that while they aren’t moving forward with a new round of quantitative easing, they will continue “Operation Twist,” a two-fold program in which the Fed will focus on long-term bonds and invest into mortgage-backed securities.

(Recently, we speculated that the Fed’s investment into mortgage-backed securities could lead to additional refinances. Click here to read more about our speculation.)

Mortgage rates nudge downward

The average rate for conforming 30-year fixed-rate mortgages fell by a single basis point (0.01 percent) to 4.22 percent. Conforming 5/1 hybrid ARM rates also fell by 1 basis point, closing the Wednesday-to-Tuesday wraparound weekly survey at an average of 3.07 percent:

Conforming 30-year fixed-rate mortgage

  •     Average rate: 4.22 percent
  •     Average points: 0.27

Conforming 5/1 ARM

  •     Average rate: 3.07 percent
  •     Average points: 0.23

Average mortgage rates and points for conforming residential mortgages for the previous week ending October 25 were, according to HSH.com:

Conforming 30-year fixed-rate mortgage

  •  Average rate: 4.23 percent
  •  Average points: 0.34

Conforming 5/1 ARM

  •  Average rate: 3.08 percent
  • Average points: 0.28

Methodology
The Weekly Mortgage Rate Radar reports the average rates and points offered on conforming 30-year fixed-rate mortgages and conforming 5/1 ARMs. The weekly mortgage rate survey covers a large sample of mortgage lenders and is conducted over a Wednesday-to-Tuesday cycle, with data released every Wednesday. HSH.com’s survey helps consumers find the best rates on home loans in changing market conditions. Unlike mortgage rate surveys that report average rates only, the Weekly Mortgage Rate Radar’s inclusion of both average rates and average points provides a more accurate view of mortgage terms currently offered by lenders.

Every week, HSH.com conducts a survey of mortgage rate data for a wide range of consumer mortgage products including ARMs, FHA-backed and jumbo mortgages, as well as home equity loans and lines of credit from hundreds of direct lenders in the U.S. For information on additional loan products, visit HSH.com.

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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.

Our bloggers:

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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