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January 18th, 2012

Mortgage rates find new room to drop, set new record low

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int rate QMarkSometimes one basis point can make all the difference.

According to HSH.com’s latest Weekly Mortgage Rate Radar, the average rate for conforming 30-year fixed-rate mortgages fell by 1 basis point (0.01 percent) to 4.02 percent, a tiny drop that was nonetheless sufficient to produce yet another new record low. The average rate for conforming 5/1 hybrid ARMs increased by 1 basis point, closing the Wednesday-to-Tuesday wraparound weekly survey at an average of 2.97 percent, just above last week’s record low.

Don’t want to wait until Thursday to see Freddie’s weekly mortgage numbers? Get your weekly figures from HSH.com. We release weekly mortgage rate surveys on Wednesdays and Fridays.

“Mortgage rates continued to drift sideways, but even small moves downward can produce new records from present low levels,” said Keith Gumbinger, vice president of HSH.com. “That fixed rates are still creeping downward is a bit of a surprise and is a plus for home shoppers and refinancers.”

Rates expected to rise

Rates will likely be nudged upward somewhat in the coming weeks. Don’t believe me? Just ask mortgage pro Dan Green.

“Congress instructed Fannie Mae and Freddie Mac to increase the loan guarantee fees that lenders pay starting no later than April 1,” noted Gumbinger. “Since it can take upwards of 60 days to get a loan to closing, some lenders have started to pass these costs along already, and more will do so in the weeks just ahead.” The new fees can potentially increase the interest rate by one-eighth of a percentage point or more.

The weekly figures

Average mortgage rates and points for conforming residential mortgages for the week ending January 17, according to HSH.com:

Conforming 30-year fixed-rate mortgage

  • Average rate: 4.02 percent
  • Average points: 0.30

Conforming 5/1-year adjustable-rate mortgage

  • Average rate: 2.97 percent
  • Average points: 0.25

According to the Mortgage Bankers Association, borrowers reacted well to record-low mortgage rates last week as applications jumped 23.1 percent from the previous week.

The end is near

The fact that borrowers are acting on these low rates is a great sign, explains Green, since the end is near for the record-low rates we’ve been enjoying for the better part of a year.

According to Green, the sooner you gain an understanding of why rates do what they do, in this case fall to record lows and remain there for some time, the sooner you will understand the urgency to act on this once-in-a-lifetime opportunity.

To learn more, be sure to read Green’s latest article on HSH.com, “The end is near for record-low mortgage rates.”

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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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