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March 17th, 2014

Lower mortgage rates: ‘A blessing of sorts’

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Expert resized-HSH SpecialLast Monday, we put out a forecast for a weekly rise in mortgage rates of about 8 to 10 basis points. Luckily for rate shoppers, last week’s increase only topped half of that.

Mortgage rates were trending higher following the employment report on March 7 and into the beginning of the week of March 10. However, global economic uncertainties helped to stymie the uptick, preventing mortgage rates from rising as much as expected.

“While we are still seeing some market repercussions from the political mess in Ukraine and Crimea, the proximate cause of the dip we expect in rates is more familiar, one we saw a month or so ago; specifically, a report that China’s manufacturing sector has become sluggish,” wrote Keith Gumbinger, vice president of HSH.com, in the latest Market Trends newsletter. “As last time, investors once again expressed their concerns about potential global repercussions of that news by stuffing cash into the relative safety of US Treasuries, driving yields down and pulling mortgage rates back down along with them.”

Current mortgage rates

Here are the latest mortgage rates for the week ending March 14:

  • 30-year: The overall average for 30-year fixed-rate mortgages (conforming, non-conforming and jumbos) rose by five basis points (0.05 percent) to land at 4.44 percent.
  • 15-year: The overall average for 15-year fixed-rate mortgages (conforming, non-conforming and jumbos) rose only by four basis points (0.04 percent) to tick up to 3.55 percent.
  • FHA: FHA-backed 30-year fixed-rate mortgages rose by more six basis points to land at 4.07 percent.
  • 5/1 ARM: 5/1 Hybrid ARMs also rose by six hundredths of a percentage point to land at 3.09 percent for the week ending March 14.

‘A blessing of sorts’

While Gumbinger describes the lower-rate environment as being “a blessing of sorts” for homebuyers and refinancing homeowners in the first few months of 2014, he’s quick to point out the other difficulties that are holding the real estate market back:

  • Difficult weather
  • Reduced affordability relative to last year
  • Tight lending standards
  • A limited inventory of desirable homes

Spring buying season begins this week

The spring homebuying season officially kicks off this week, although the weather here in the Northeast feels like anything but spring.

There are a lot of answered questions ahead of us as we enter homebuying season, mainly, how will existing sales increase without the proper inventory?

“Overall, in the big picture, the pressure for rates remains more upward than downward,” said Gumbinger. “Mortgage-rate shoppers expect only “temporary downward dips unless some truly severe event should occur.”

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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.

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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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