September 4th, 2013

Mortgage rates slip lower, HARP activity sets new record



Rates on the most popular types of mortgages eased slightly according to’s Weekly Mortgage Rates Radar. The average rate for conforming 30-year fixed-rate mortgages fell by three basis points (0.03 percent) to 4.63 percent. Conforming 5/1 Hybrid ARM rates decreased by a single basis point, closing the Wednesday-to-Tuesday wraparound weekly survey at an average of 3.45 percent.

Why are mortgage rates falling?

Mortgage rates continue to be pulled back and forth by both economic and political considerations,” said Keith Gumbinger, vice president of “The economy appears to be growing at a fair clip, but in an uneven pattern, so investors must keep trying to guess how the Federal Reserve will proceed with its plans for ending extraordinary monetary support. Meanwhile, the difficult situation in Syria and the Middle East is causing wary overseas investors to push some cash into the relative safety of U.S. Treasury bonds, pressing rates lower.”

Both situations are likely to remain murky, as a U.S. military response in Syria is possible, producing uncertain responses in financial markets. As many mortgage borrowers have come to understand, troubles in places well beyond our borders can produce lower mortgage rates as investors shield assets in so-called “flight-to-safety” moves.

Pay attention to the employment report

The employment report for August (due Friday) may be the linchpin for the Fed’s decision to begin tapering purchases of mortgage-backed securities and Treasury bonds, with a strong or weak report likely determining the start or composition of the taper.

“An unclear path ahead suggests that more volatility for mortgage rates can be expected,” adds Gumbinger. “We have had some considerable day-to-day moves in rates, only to end the week near where we began. Unfortunately, both those start and end points for mortgage rates remain near two-year highs, with the direction for rates heading upward at the moment.”

Mortgage applications increase

Mortgage borrowers responded to slightly lower rates last week as mortgage applications increased modestly from the week prior.

According to the Mortgage Bankers Association, overall mortgage applications were up 1.3 percent for the week ending August 30.

The biggest boost came from HARP refinance applications which were up 3 percent to 38 percent, the highest point since the MBA began tracking these applications in early 2012. Overall refinance applications were up 2 percent, while purchase applications fell for the first time in weeks, down 0.4 percent.

Will we see another HARP program?

Dan Green, a loan officer and blogger in Cincinnati, has been writing a lot recently about the possibility of another wrinkle to the HARP refinance program, dubbed “HARP 3.0.”

“HARP 3 is full of promise for U.S. homeowners and for housing,” wrote Green earlier in the week. “It’s sitting in committee and could pass as soon as this week, or as late as never. One thing is certain, though — demand is strong and increasing each week.”

We’ll know more on the future of HARP 3.0 when Congress reconvenes next week.

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About the HSH Blog'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 and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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