Mortgage rates ease toward record lowsby Tim Manni
Rates on the most popular types of mortgages moved in slightly different directions, with a drop for fixed rates and a slight climb for ARMs, according to HSH.com’s Weekly Mortgage Rates Radar. The average rate for conforming 30-year fixed-rate mortgages fell by three basis points (0.03 percent) to 3.51 percent. Conforming 5/1 Hybrid ARM rates increased by two basis points, closing the Wednesday-to-Tuesday wraparound weekly survey at an average of 2.61 percent.
“Compared with the last quarter of 2012, the economy grew at a faster rate in the first quarter of 2013, but only at a muted pace, and with a decidedly soft end in March. Since then, there have been few signs of improvement, so mortgage rates remain in a flat-to-falling pattern,” said Keith Gumbinger, vice president of HSH.com. “The Federal Reserve finishes their regular policy meeting today, and it seems likely that policies to keep both interest rates and mortgage rates low will remain fully in place for the foreseeable future.”
When the economy seemed stronger earlier this year, discussions began to take place at the Fed as to when and how to remove “policy accommodation,” occurring presently in the form of outright purchases of Treasury bonds and mortgage-backed securities and collectively known as QE3.
“There was a chance that the Fed would start to taper their purchases of Treasuries or MBS as summer approached,” added Gumbinger. “But that is starting to look less the case, given the still-soft state of the economy. Odds favor that the programs will continue until much later in the year, so mortgage rates should continue to be available at fantastic rates.”
HARP refinances leading the way
Overall, mortgage applications were up nearly 2 percent last week, according to the Mortgage Bankers Association.
While the share of purchase applications decreased 1.4 percent for the week ending April 26, near-record-low mortgage rates have kept the refinance wheels spinning. The share of refinance applications ticked up 3 percent from the week prior and is at its highest level since Jan. 18.
HARP refinances now occupy 34 percent of all refinance applications, the highest level since the MBA began tracking HARP applications in early 2012.