Mortgage rates falling this weekby Tim Manni
Rates on the most popular types of mortgages moved deeper into record territory according to HSH.com’s Weekly Mortgage Rates Radar. The average rate for conforming 30-year fixed-rate mortgages fell by four basis points (0.04 percent) to 3.70 percent. Conforming 5/1 Hybrid ARM rates decreased by three basis points, closing the Wednesday-to-Tuesday wraparound weekly survey at average 2.78 percent. Both mortgage products are at new record lows.
“Repeated record lows for mortgage rates are having a beneficial effect on the housing market,” said Keith Gumbinger, vice president of HSH.com. “Perhaps more important than new record lows is that rates have held stable or decreased in the weekly surveys for months, allowing homebuyers time to plan, execute and complete their transactions.”
Federal Reserve Chairman Bernanke noted as much in his testimony before Congress on Tuesday. His prepared text stated that, “In part because of historically low mortgage rates, both new and existing home sales have been gradually trending upward…”. In addition, the latest survey from the National Association of Home Builders, an index of market activity, moved to its highest level in over five years in July and has moved up appreciably over the past six months as mortgage rates have slowly declined.
Value is created not just from low mortgage rates, but stable ones as well, noted Gumbinger. “Knowing that the mortgage rate you will get at the end of the buying transaction will be the same or even better than when you started can provide a potential homebuyer a strong boost of confidence, making it easier to want to start the process in the first place.”
Mortgage apps, home starts and equity all up
Reacting to record-low mortgage rates, mortgage applications for purchase and refinance were up last week, according to the Mortgage Bankers Association. Overall, applications were up 17 percent from the week prior, with refinance applications surging 22 percent.
“In June, new home starts hit their highest level since October 2008, and housing permits are up 29 percent in the first six months of this year compared to last,” said Acting U.S. Commerce Secretary Rebecca Blank. “However, while the housing market is stabilizing, too many homes are still underwater and too many homeowners are still struggling to make ends meet.”
According to CoreLogic, while more than 700,000 households regained a positive equity position during the first quarter of 2012. However, 23.7 percent of all residential properties remain underwater—a number that’s still far too high. At least the needle is moving in the right direction.