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March 3rd, 2014

The economy has us all confused, mortgage rates included

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Whats Next 290Mortgage-rate activity last week was summed up well by HSH.com Vice President Keith Gumbinger at the conclusion of our latest Market Trends newsletter:

“Mimicking much of the economy and certainly consumer moods, mortgage rates are moving mostly sideways. There’s just enough hope and optimism that this (economic) soft patch will break up to keep rates from falling, and just enough concern that we could be in for a longer rough patch to keep them from rising much.”

It has been a bit of a confusing time for market analysts to explain the current economic condition. Stronger signals at the end of 2013 have given way to more inconsistent signals through the first few months of 2014.

For example, amidst housing starts declining in January and home-builder moods tanking in February, new-home sales somehow managed an unexpected rise in January. Yet just last week the Mortgage Bankers Association reported that purchase applications fell to a 19-year low and have declined for six out of the last eight weeks.

So where are these purchases coming from? What exactly is behind this economic slowdown? Is it really all weather related?

Mortgage rates decline slightly

Mortgage rates themselves have responded accordingly to these open-ended questions by moving sideways last week. According to the latest figures from HSH.com for the week ending February 28:

  • 30-year: The overall average rate for 30-year fixed-rate mortgages (conforming, non-conforming and jumbo) slipped by two basis points (0.02 percent) to land at 4.42percent.
  • 15-year: The overall average rate for 15-year fixed-rate mortgages (conforming, non-conforming and jumbo) eased by a single basis point (0.01 percent) to dip to 3.54 percent.
  • FHA: FHA-backed 30-year FRMs declined by two basis points to land at 4.04%
  • 5/1 ARM: The overall 5/1 Hybrid ARM found no reason at all to move, holding steadfast at an average rate of 3.06%, remaining at its lowest rate since late November.

What will happen this week?

With several first-of-the-month reports out this week, we will get another shot at interpreting the economy’s direction and its influence on mortgage rates. As of now, we’re expecting more of the same by the time Friday rolls around.

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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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