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September 3rd, 2013 (Modified on September 4th, 2013)

Mortgage rates down off two-year highs

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Below is an excerpt from of our latest Market Trends newsletter, Keith Gumbinger’s weekly examination of the economic conditions that influenced mortgage rates. Sign up to receive the Market Trends in your inbox Friday evening.

A combination of mostly less-strong economic data and new troubles in the Middle East saw investors push more cash back into bonds, driving interest rates lower and trimming the top off the steep rise in mortgage rates from two weeks ago.

World troubles help mortgage borrowers

We’ve noted before that troubles around the world can be a mortgage borrower’s friend; this happenstance has been repeated time and time again.

For example, financial troubles in the eurozone both last and this year were one of the reasons mortgage rates pushed to near 60-year lows, as investors looks to get their holdings out of harm’s way and into the relative safety of U.S. Treasury offers.

Arguably, rates would have settled back somewhat despite the new political and perhaps military concerns in the Middle East, as available data continues to point to an economy enduring fair growth, but that which seems to be coming in fits and starts.

Mortgage rates down off two-year highs

HSH.com’s broad-market mortgage tracker found that the overall average rate for 30-year fixed-rate mortgages (conforming, non-conforming and jumbo) declined by seven basis points (0.07 percent) to 4.68 percent, easing back from last week’s two-year high.

The overall average rate for 15-year fixed-rate mortgages (conforming, non-conforming and jumbo) slipped by just four basis points (0.04 percent), landing at 3.76 percent for the week.

Popular FHA-backed 30-year FRMs shed 10 basis points, sliding to 4.26 percent, while the overall 5/1 Hybrid ARM moved by a one one-hundredth of a percentage point to 3.41 percent for the week ending August 30.

Mortgage rates are starting to influence home sales

While we don’t generally put all that much stock in the Pending Home Sales report from the Realtors, the 1.6 percent decline in signed contracts may presage some slowdown in sales of existing homes when the August numbers come out next month.

This is to be expected, since a combination of higher mortgage rates and home prices in some markets has no doubt pushed some buyers to the sidelines, at least temporarily. Earlier in the month, we learned that new home sales slumped in July, so we may just be starting to see the effects of the new financing climate for housing.

Mortgage-rate roller coaster

Mortgage rates continue to pogo stick, fully dependent upon:

  • The vagaries of incoming economic data
  • Concerns about what the Fed will do; and of course,
  • The difficult political environment unfolding in the Middle East

Relative to early this year, we have had considerably more volatile mortgage markets over since mid-May, and the pressure for mortgage rates remains generally in a more upward than downward fashion.

When mortgage rates fall, act!

Any dips in mortgage rates are an opportunity for borrowers to act, most particularly for any homeowners who have been waiting for their situation to better align with a refinancing chance, but also for potential homebuyers who are in the fray at the moment and hope to capture even a slightly smaller monthly payment.

A holiday-shortened week is upon us this week, but the four-day week is chock full of fresh and important data. Based solely on expectations for a set of solid reports, mortgage rates will probably rise somewhat; however, a tempering and unknowable force will come in the form of any response to the issues in Syria, and beyond.

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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.

Our bloggers:

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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