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November 12th, 2012

Markets vote for lower mortgage rates

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Below is an excerpt from the latest Market Trends newsletter, HSH.com’s weekly look at how the economy influenced mortgage rates and the real estate market. Sign up and receive the newsletter Friday night in your inbox.

int rate QMarkIn the end, after much distraction and hundreds of millions of dollars spent, it is four more years for the existing Obama administration. With the distraction of the election finally over, perhaps some attention can be turned toward the impending fiscal cliff–changes to health care and taxes, implementation of rules governing (and perhaps even reform of) the mortgage market and more.

Change at the top or not, several things are firmly in place and going nowhere fast, and all have an influence on mortgage rates.

Most importantly, the economy remains in a low-growth funk, the Federal Reserve is continuing to buy up mortgage-backed securities and inflation remains at temperate levels. At the moment, there are few indications that these items will change anytime soon, but there may be risks on the horizon.

Mortgage rates decline

HSH.com’s broad-market mortgage tracker–our weekly Fixed-Rate Mortgage Indicator (FRMI)–revealed that the overall average rate for 30-year fixed-rate mortgages declined last week by three basis points (0.03 percent) to 3.68 percent, matching a previous record low.

Meanwhile, the FRMI’s 15-year companion moved lower by the same three basis points (.03 percent) to slip to 2.99 percent, under the 3 percent mark for the first time.

FHA-backed 30-year FRMs eased by four hundredths of a percentage point, as the most viable option for credit- or equity-impaired borrowers saw its average slip to 3.31 percent.

The overall average rate for 5/1 Hybrid ARMs held firm at 2.72 percent, a value attained in four of the past five weeks.

Also worthy of note is that with a four basis point decline, jumbo 30-year fixed-rate mortgages broke below the 4 percent barrier for the first time.

Mortgage applications are down

Some back-and-forth movement is often typical in volumes of mortgage applications as they wax and wane with gains and dips in interest rates and other conditions.

However, with average rates just a handful of basis points above record lows, we are left to ponder the recent declines in applications for mortgages. The Mortgage Bankers Association reported a fifth straight weekly decline in apps, and while purchase applications have gone up and down over that period, applications for refinancing have gone only down, and are near a six-month low. With a typical holiday slowdown in activity coming before long, we would hope to see a flare higher in applications before the quiet period sets in.

Mortgage rates could continue to decline

With the excitement, noise and distraction of election season behind us, we’re left with the still-stark reality of the economy to face. While no doubt in a better place than during the middle of the year, and possibly on an improving bent, there isn’t all that much to produce any kind of rampant enthusiasm at the moment.

While mortgage rates will continue to remain steady this week, we might see a little decline. The stock market selloff of the past couple of days has pushed some money back into bonds, driving yields down, and there may also be a little downward pull from a lack of demand for mortgage credit, too. The continued fall in apps might just serve to make some lenders price a little more aggressively to get more folks in the door.

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2 Responses to “Markets vote for lower mortgage rates”

  1. Mitch Mitchell Says: November 25th, 2012 at 10:17 pm

    Hi Keith,

    I have to admit that I don’t fully understand all of your stats, but from where I set it sounds like it’s a great time for buying a home and that there’s encouragement that the home industry is moving forward, even if things are slow. I’m all for anything that helps people buy new homes safely, as opposed to what brought the housing market into the situation it’s in to begin with.

  2. Ben Koshkin Says: November 25th, 2012 at 10:29 pm

    You are definitely right. Everyone vote for lower mortgage rates. This choose may harm you. Thanks a lot

    Ben Koshkin
    Land development

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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.

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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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