The Mortgage Industry

Mortgage Interest Rates Ease Further This Week

Posted on Saturday, January 15, 2011

Two separate industry reports released Thursday show that mortgage rates retreated this week, marking the second week in a row they’ve headed lower. Interest rates
began a sharp ascension from record lows in early November, and experts have warned that the trend is likely to continue. Rates across the board, though, are still well below what’s considered the norm by historical standards.
Frank Nothaft, Freddie Mac’s chief economist, attributes the recent change of pace to last Friday’s less-than-favorable jobs report.
Although the nation’s unemployment rate fell from 9.8 percent to 9.4 percent in December, Nothaft said, “Bond yields drifted lower following the release of the December employment report, which was weaker than the market consensus forecast and implied that the labor market is still in a sluggish recovery. Fixed mortgage rates followed bond yields lower.”
According to Freddie Mac’s latest mortgage rate survey, rates for a 30-year fixed mortgage averaged 4.71 percent (0.8 point) for the week ending January 13, 2011. That’s down from 4.77 percent the previous week and brings the average 30-year rate to a four-week low.
The average for a 15-year fixed-rate mortgage this week came in at 4.08 percent (0.7 point), according to the GSE’s analysis. Last week, it was 4.13 percent.
Short-term rates also headed lower. The 5-year adjustable-rate mortgage (ARM) dropped from 3.75 percent to 3.72 percent (0.7 point) this week, and the 1-year ARM slipped from 3.24 percent to 3.23 percent (0.6 point), Freddie Mac reported.
Freddie Mac’s weekly rate survey is based on data gathered from about 125 lenders across the country. A separate study released by Bankrate Thursday, which derives its figures from data provided by the top 10 banks and thrifts in the top 10 U.S. markets, showed similar results.
According to Bankrate’s survey, mortgage rates were mostly lower this week, except for the benchmark conforming 30-year fixed mortgage rate, which held steady at 4.94 percent (0.38 point).
The average 15-year fixed mortgage retreated to 4.29 percent (0.43 point) among the lenders Bankrate surveys, down from 4.32 percent last week. The larger jumbo 30-year fixed rate settled at 5.57 percent. Last week, it was averaging 5.59 percent.
Adjustable rate mortgages were down more notably, Bankrate said, with the average 5-year ARM sinking to 3.88 percent and the 7-year ARM plunging to 4.24 percent.
“Both fixed and adjustable mortgage rates have been range-bound since mid-December, following a sharp run-up in the month prior to that,” Bankrate said. “A heavy dose of economic data and ongoing debt issuance by the U.S. Treasury have the potential to introduce some volatility to mortgage rates over the next week.”
Bankrate also surveys a panel of mortgage experts each week to gauge which direction they think rates will head over the next seven days. The tracking company says if there is one thing the respondents agree on, it’s that mortgage rates won’t fall.
While none of those polled predict a decline, 44 percent forecast an increase in mortgage rates over the coming week. The remaining 56 percent expect mortgage rates will remain more or less unchanged.
By: Carrie Bay, DS News


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