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June 6th, 2012

Summer: The best time to lock in a mortgage rate



int rate lockBack on May 29, we speculated that a summer homebuying season may be in the works. While we all know spring is traditionally the busiest season for the real estate market, mortgage-rate trends over the last few years, including this year, indicate that early summer is one of, if not the best time to lock in a mortgage rate.

Keith Gumbinger, vice president of HSH.com, summarized the recent summer mortgage-rate trend as an “incessant clang [that] appears to be serving as a wakeup call to potential homebuyers.”

Loan officer Dan Green explained that this is no fluke. Over the past few years, mortgage rates have actually peaked in the spring and trended downward into the summer.

“2012 marks the third straight year that U.S. mortgage rates peaked in spring, before falling into summer,” wrote Green on his blog yesterday. What’s most interesting, is Green explained that the “financial storyline” playing out this year is the same one we’ve seen since 2010. “The similarities between 2010, 2011 and 2012 are remarkable.”

Here’s the trend over the past three years (as explained by Green):

  • January – March: U.S. consumer spending makes big gains; Holiday shopping shown strong
  • February – April : U.S. experiences strong job growth, stock market soars
  • March – April: Crisis emerges in the Eurozone, job growth slows. Mortgage bonds sell

Mortgage rates keep falling

HSH.com’s latest Weekly Mortgage Rates Radar confirms that the trend is continuing–mortgage rates just keep on falling.

Rates on the most popular types of mortgages slipped again, according to HSH.com’s Weekly Mortgage Rates Radar. The average rate for conforming 30-year fixed-rate mortgages fell by 7 basis points (0.07 percent) to 3.81 percent. Conforming 5/1 hybrid ARM rates decreased by 3 basis points, closing the Wednesday-to-Tuesday wraparound weekly survey at a record-tying average of 2.85 percent.

“Mortgage rates managed to slide again this week, driven there by investors looking to get their money out of harm’s way,” said Gumbinger. “Investors in stock markets around the world have had a tough time of it lately and especially over the last week.”

Investors have continued to seek the relative safety of U.S. Treasury bonds, a trend that has suppressed yields. Fixed-rate mortgages are especially influenced by the movement of U.S. Treasury bond yields, although moves in mortgage rates are less pronounced than those of Treasurys.

“It would be hard to expect continued declines in yields and rates from this point, with mortgage rates reckoned to be at 60-plus-year lows at the moment. However, there are plenty of troubles in the world and a slow economy here in the U.S., so anything is possible,” commented Gumbinger. “That said, even a modest bit of stability in the eurozone would push rates higher rather quickly, if only to previous record lows.”

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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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