According to the latest issue of HSH’s Market Trends Newsletter, Rates Tip Backward; Stimulus and More Coming, “A weeks-long run of rising mortgage rates ended this week despite vague pronouncements from the new Treasury Secretary about forthcoming plans for the second $350 billion of TARP money.”

“For the week, HSH’s overall average for the cost of mortgage money — our Fixed-Rate Mortgage Indicator (includes conforming, jumbo and ‘expanded conforming’ interest rates) — dropped by eighteen basis (.18%) points to land at 5.76%, the lowest such average in a month. As mortgage rates have risen over the past few weeks, there has been a corresponding slide in applications for home loans, according to the Mortgage Bankers Association of America. Among other factors, at least some of the increase can be attributed to lenders pricing ‘defensively’ to temper an unmanageable crush of business, and it would seem that the crush has subsided enough to warrant an attempt to attract more business.”

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According to Monday’s Market Trends Newsletter: “Conforming 30-year FRMs — which, by some measures, dipped below the 5% mark last week — rose to an average 5.34%, while 30-year FRM jumbos tracked just 11 basis points higher.”

Despite 30-year conforming rates easing upwards, and reports that mortgage applications are plunging, refinancing is still a viable option for many borrowers.

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According to the January 9 issue of HSH’s Market Trends Newsletter, Mortgage Rates Easing, May Crack 5%, “As long as lousy economic news continues to blare from headlines and televisions, mortgage rates will have at least some downward pressure. And, in fact, the average 30-year fixed might just fall below 5% this week.

Conforming rates led the downward charge this [past] week — the daily average for a 30-year conforming FRM landed at 5.05% on Friday, besting the previous daily low of 5.06% seen on December 17 — but jumbo rates are trending downward, too, with the average 30-year Jumbo FRM now standing at 6.82%, the lowest such rate since nearly a year ago.

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What or who can we thank for mortgage rates falling to levels unseen in over 40 years? Simply put, there are a trio of main factors that have allowed 30-year fixed-rates to drop. A recessionary economy, an ease in inflationary pressures, and the Fed’s new-found support for the market have all led to this historic opportunity for borrowers.

We need not explain the harsh realities of the current economy. Tuesday’s Consumer Price Index (CPI) report was just the latest evidence of the price free fall consumers are currently experiencing. Although due in large part to significant and steady declines in energy prices, even the Producer Price Index (PPI) has declined for four months in a row.

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Good news for loan shoppers: the rate on a 30-year fixed rate mortgage dropped to 5.49% Wednesday evening from 5 .54% on Tuesday. Fixed rates have continued to ease since the Fed announced their $600 billion initiative to buy Fannie and Freddie debt and mortgage-backed securities (MBS).

The Fed’s plan to purchase $100 billion in F&F’s debt will serve to tremendously ease their costs. The central bank’s guarantee to purchase $500 billion in MBS has generated a new buyer in the market, accomplishing the goal of allowing fixed rates to drop further.

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Yesterday’s actions by the Federal Reserve sent mortgage rates down to levels unseen since February of this year. According to HSH, the conforming 30-year fixed rate dropped to 5.77% from 6.06% on Monday, the largest single-day drop since September 8 of this year when the Fed announced Fannie Mae and Freddie Mac would be put into conservatorship.

From the front page of the Wall Street Journal:

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In the latest issue of HSH’s Market Trends Newsletter, we discuss last week’s economic events, reports and how they influenced the economic environment. “Economy Sours But Rates Hold Steady; Loan Mods Modified Again” also begs the question that has repeatedly been on the minds of many: where are the “real incentives for the majority of Americas who aren’t getting a loan mod, bailout, or direct support?” We’re still waiting.

November 21, 2008 — The drumbeat of bad economic news continues, and grows louder. In other economic periods, this would often be accompanied by sliding fixed mortgage rates, but in the risk-averse and panic-market world of 2008, that’s simply not the case. Mortgage rates remain stubborn, reflective of the ongoing troubles in housing.

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Some big changes to government programs came along last week. “Treasury Secretary Paulson all but abandoned the original Troubled Asset Relief Program (TARP). The process of culling rotten loans and securities turned out to be more cumbersome and slow than expected, and our guess is that lenders simply failed to show much interest in the program, which would have exposed those assets to some pretty harsh market valuations.”

“Whatever the reason, the focus (and at least some of the remaining cash in the TARP) will be put toward building backstops for AAA-rated markets for auto loans, credit cards, and other kinds of loans. The goverment still hopes to spur this kind of lending, since it came to a crashing halt over the last few weeks with dire consequences for the economy, which continues to struggle considerably.”

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HSH’s latest issue of its Market Trends Newsletter, “Mortgage Markets, Election Aftermath,” discusses the election’s influence on the movement of last week’s mortgage rates. As the Fed pondered loans for the auto industry, factory orders and manufacturing activity declined, yet despite job cuts worker productivity increased:

In the weeks leading up to the election, mortgage rates bounced higher and lower by unusually large amounts on a week to week basis. This week was a little different, in that the size of the up and down stroke diminished somewhat. Swings in rates have been up 40 basis points, down 37, up 34 again and down again this week. Perhaps we are trending back toward a more stable period.

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The most recent issue of HSH’s Market Trends Newsletter, “Mortgage Rates: It’s All About Change,” leads off by discussing last week’s rise in mortgage rates:

October 31, 2008 — Rates go up, rates go down, and back around we go. Home mortgage rates spiked higher this week, as it appeared that at least some money stuffed into shelter amid the recent market storms came back out to play again in equity markets. Stock markets sprung higher, dragging interest rates upward, as the continuing search by investors trying to rebalance uneasy portfolios continues to whipsaw different markets at different times.

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