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January 4th, 2012

2012 begins with low mortgage rates

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Mortgage Rate ConceptDespite a slight increase from the week prior, mortgage rates kicked off the new year near historic lows. According to HSH.com’s latest Weekly Mortgage Rate Radar report, rates and points offered by lenders for the two most popular types of mortgages–the conforming 30-year fixed-rate mortgage and the conforming 5/1 adjustable-rate mortgage (ARM)–both rose slightly during the week ending January 3.

The average rate for conforming 30-year fixed-rate mortgages rose by a single basis point (0.01 percent) to 4.07 percent. Conforming 5/1 hybrid ARM rates increased by 2 basis points, closing the Wednesday-to-Tuesday wraparound weekly survey at an average of 3.02 percent.

“There’s often little movement in rates during the holidays,” said Keith Gumbinger, vice president of HSH.com. “Markets will start to return to normal levels of activity over the next couple of days, and that should set the tone as we move deeper into January.”

The Federal Reserve announced on Tuesday the intention to begin providing quarterly projections of the likely direction of future interest rates. “This important change to the Fed’s communication strategy will help to provide a better sense of when interest rates can be expected to begin rising,” said Gumbinger. “The Fed’s current timeline is to consider raising rates starting in mid-2013, but rates may not rise until possibly even later than that.”

However, Gumbinger noted that mortgage borrowers should not rely on projections of the federal funds rate to set expectations about mortgage rates. “For this year at least, short-term rates should remain at or near record lows, but fixed mortgage rates don’t follow short-term rates very closely,” he said. Mortgage rate projections for the coming year can be found at HSH.com’s expectations for mortgage rates and housing markets for 2012, which was also released Tuesday.

Average mortgage rates and points for conforming residential mortgages for the week ending January 3 were, according to HSH.com:

Conforming 30-year fixed-rate mortgage

  •     Average rate: 4.07 percent
  •     Average points: 0.25

Conforming 5/1 ARM

  •     Average rate: 3.02 percent
  •     Average points: 0.21

Average mortgage rates and points for conforming residential mortgages for the previous week ending December 27 were, according to HSH.com:

Conforming 30-year fixed-rate mortgage

  •     Average rate: 4.06 percent
  •     Average points: 0.27

Conforming 5/1 ARM

  •     Average rate: 3.00 percent
  •     Average points: 0.23

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.

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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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