July 9th, 2012 (Modified on July 17th, 2012)

Mortgage rates continue easing pattern to new lows



Below is an excerpt from our latest Market Trends newsletter, available Friday night in your inbox: Flipping Calender

Given the increasingly bleak economic data, no one should be very surprised that mortgage and other interest rates are finding some additional space to fall, even if that fall is measured in only hundredths of a percentage point.

With each report, it becomes more clear that the US economy is close to stall speed, and that the slowdown in the economies of our trading partners is having a considerable effect. Several central banks took action this week to lower interest rates, which may ultimately help, but there is little immediate benefit to be seen.

Mortgage rates trickle lower’s broad-market mortgage tracker — our weekly Fixed-Rate Mortgage Indicator (FRMI) — found that the overall average rate for 30-year fixed-rate mortgages declined by two basis points (.02%), easing to a new record low of 3.96%. The FRMI’s 15-year companion also managed a decline of two basis points, landing at 3.25%, just a lone basis point above a record low. Important to homebuyers and low-equity-stake refinancers, already-low FHA-backed 30-year mortgages shed eight basis points to slide to an incredible 3.58%, while the overall average rate for 5/1 Hybrid ARMs finished at 2.88%, a decline of a just 0.01% but enough to set a new low.

See the latest trending graphs of mortgage rates.

Job growth diminishes

The American economy cannot lift the world if so many people remain unemployed. Job growth in June was a meager 82,000, capping off a quarter where the total of new jobs created (225,000) wasn’t even as strong as February’s monthly gain (259,000). The nation’s official rate of unemployment remained at 8.2% but many potential workers have simply stopped looking for work and aren’t even counted.

Does the LIBOR scandal matter?

With regards to the financial system, we were asked this week about any effect that the LIBOR scandal might have on adjustable rate mortgages. While we cannot foresee any, excepting perhaps stronger oversight of the proceedings of the rate-setting group, it could be noted that it is the one financial scandal which may have benefited consumers, as any bias in the indicator which may have occurred was to the downside, not the upside. To the extent that any mortgages came to a reset point during the period when the manipulation of the key interest rate is alleged to have occurred, that reset rate would have been lower than if LIBOR had not been tweaked.

Mortgage rates will likely slip again this week.

It would be hard to expect that there will be much news out next week that will move rates by much; after the employment report today, they will at least start the week headed into new record territory (again). The minutes of the Fed’s last meeting could shed some light into any potential plans for more extraordinary support to come, but there will probably not be much to work with at this point. Consumer credit trends, the producer price index, international trade and consumer sentiment readings round out the news. Lower rates seem in the offing for this week, but you probably already guessed that.

For more context and a fuller discussion of the above items and more that affect homebuyers and refinancers, read the complete MarketTrends. You can subscribe for e-mail delivery of the’s authoritative newsletter on Friday evening at no cost.

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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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