Mortgage rates finally retreatby Tim Manni
You can finally breathe a sigh of relief; the brief rise in mortgage rates is over, according to HSH.com’s latest weekly mortgage rates report.
According to the weekly Mortgage Rates Radar, the average rate for conforming 30-year fixed-rate mortgages fell by five basis points (0.05 percent) to 3.74 percent. Conforming 5/1 Hybrid ARM rates decreased by two basis points, closing the Wednesday-to-Tuesday wraparound weekly survey at an average of 2.76 percent.
“Although rates hadn’t climbed much off of record lows, no potential homebuyer or refinancer was happy to see even the slight increase in rates,” said Keith Gumbinger, vice president of HSH.com. “As the economic news has been only slightly warmer in recent weeks, it appears that rates moved a little further than they should have, and are now settling back.”
Mortgage borrowers react
As usually is the case with rising mortgage rates, mortgage applications pulled back some last week as rates were steadily lifting (albeit by only a few basis points) off record lows.
Mortgage loan applications fell by 4.3 percent during the week ending August 24, according to the Mortgage Bankers Association. Refinance applications were down 6 percent while purchase applications fell by only 1 percent.
Are lower mortgage rates a reality?
There are plenty of reasons why mortgage rates should remain stable or continue to fall. Tepid economic conditions, a soft inflation pattern and an active Fed continue to contribute to the low interest rate environment, explains Gumbinger.
“There’s very little evidence to support a sustained rise in rates,” Gumbinger noted, “growth is modest at best with plenty of headwinds, and it’s not clear that the Fed sees any urgency to try to press rates much lower at the moment. These are topics we discuss in greater detail in the latest ‘Two-month forecast for mortgage rates’ at HSH.com.”