Mortgage rates still falling after Fed’s no-decisionby Tim Manni
Rates on the most popular types of mortgages declined considerably according to HSH.com’s Weekly Mortgage Rates Radar.
The average rate for conforming 30-year fixed-rate mortgages fell by 16 basis points (0.16 percent) to 4.49 percent. Conforming 5/1 Hybrid ARM rates decreased by 13 basis points (0.13 percent), closing the Wednesday-to-Tuesday wraparound weekly survey at an average of 3.31 percent.
“After hearing about rising mortgage rates for months, consumers should welcome the news of a decline,” said Keith Gumbinger, vice president of HSH.com. “The Federal Reserve’s decision to keep its quantitative easing programs running for at least a while longer allowed mortgage and bond markets a chance to relax and interest rates to fall, at least for a little while.”
Fed still waiting on the economy
The Fed had been widely expected to pull back on its purchases of Treasury and mortgage bonds, but decided that the slow and uneven economic recovery warranted continuing support.
The Fed has said on several occasions that it would like to taper these purchases, but that it will only do so in the context of a warming economy in which inflation remains tame and the unemployment rate has fallen closer to 7 percent.
Borrowers: Don’t delay
“Mortgage rates have moved downward, and probably will for at least a few more days,” said Gumbinger. “After that, they are likely to level off, and if the incoming economic data continues to have a warmer tone to it, we expect that they will again firm up a little as we approach the next Fed meeting at the end of October, so potential borrowers should not delay too long in getting a deal in place.”
Mortgage applications rise thanks to lower rates
Reacting to the lower rates brought on by the Fed, mortgage borrowers took notice as evidence by a rise in mortgage applications.
According to the Mortgage Bankers Association, mortgage application volume was up 5.5 percent for the week ending September 20. Refinance applications were up 5 percent and purchase applications were up 7 percent.
While the MBA reported Wednesday that “the Purchase Index was at its highest level since July 2013,” FHA mortgage applications were down at 28.4 percent, “the lowest level since early August and close to the series low of 28.2 percent in June 2013.”
Finally, whether it’s just the lower rates or the renewed promotional support for HARP, HARP applications represented 41 percent of all refinance applications last week, and now sit at its highest threshold since the MBA began tracking these applications in early 2012.