Mortgage rates bob lowerby Tim Manni
Keith Gumbinger, vice president of HSH.com, began the most recent Market Trends newsletter by comparing mortgage rates to a boat on the water, bobbing up and down “in single- and multi-week swells.”
“Watching mortgage rates lately might make you a little queasy,” wrote Gumbinger, given their constant movement, but the interest-rate waves broke in the right direction last week as products of all stripes saw a decline.
Mortgage rates declined
According to HSH.com’s Monday-through-Friday survey, mortgage rates declined last week:
- 30-year: The overall average rate for 30-year fixed-rate mortgages (conforming, non-conforming and jumbos) decreased by eight basis points (0.08 percent) to 4.37 percent.
- 15-year: The overall average rate for 15-year fixed-rate mortgages (conforming, non-conforming and jumbos) managed a fall of only five basis points (0.05 percent) from the prior week’s value, dropping to 3.48 percent.
- FHA: The popular FHA-backed 30-year fixed-rate mortgage is again testing the four percent level, with a four basis point decline setting it at 4.02 percent for the week ending November 22.
- 5/1 ARM: The overall 5/1 Hybrid ARM closed in on the three percent mark, falling by four hundredths of a percentage point (0.04 percent) to 3.02 percent for the week.
Tapering on the way?
The minutes from the latest Federal Reserve meeting were released last week, revealing “that the intention to exit QE remains fully in place,” wrote Gumbinger. With the question of “when will QE officially end?” still unanswered, we wonder how effective the program is and if we still need it.
“The efficacy of the program may be diminishing, as at one time it produced record-low mortgage rates and certain Treasury yields; however, that is no longer the case, even with the Fed fully in the market and inflation quite low.”
Gumbinger believes that the Fed might consider tapering QE over the next few weeks, even if the economic thresholds the Fed tied to tapering aren’t reached.
This week …
“Compared to early in the week [last] week, interest rates firmed up a little though Thursday and Friday, so it’s to be expected that we’ll see rates moving back up a little [this] week.”