Mortgage Rates Find New Lows Again

Fixed-rate mortgages continued to fall to new record lows this week, amid indications of a continued modest recovery in the housing market.

Average interest rates on 30-year fixed-rate mortgages dropped to 3.31 percent, according to today’s weekly Freddie Mac rate survey, down from 3.34 percent last week. Fifteen-year fixed-rate loans, popular for refinancing, declined slightly to an average of 2.63 percent, down from 2.65 percent last week.

Both are all-time lows for those loan types in the Freddie Mac survey. The figures include an average of 0.7 points in fees and discounts.

Meanwhile, initial rates on 5-year Treasury indexed adjustable-rate mortgages (ARMs) held steady at 2.74 percent, same as last week, with an average of 0.6 points in fees and discounts.

“Fixed mortgage rates continued to ease somewhat this week to record lows and should help the ongoing housing recovery,” said Frank Nothaft, Freddie Mac chief economist.

Housing market shows positive signs

Nothaft noted that new home construction, reported yesterday by the Census Bureau, was up 3.6 percent in October and is at its strongest pace since July 2008. On Tuesday, the National Association of Realtors reported that existing home sales rose 2.1 percent in October, exceeding expectations, to an annualized rate of 4.79 million. And homebuilder confidence rose for the sixth consecutive month in November, according to the National Association of Homebuilders/Wells Fargo Housing Market index.

Eventually, a housing recovery and improved economy should cause mortgage rates to begin to rise, as demand for credit increases as the economy grows.

Refinance demand eases slightly

Applications for mortgages to purchase new homes were up slightly last week, rising a seasonally adjusted 3 percent according to figures released this morning by the Mortgage Bankers Association. At the same time, that represented a 6 percent annual decline from the same week one year ago.

Despite declining mortgage rates demand for refinancing was down last week, decreasing a seasonally adjusted 3 percent according to the MBA. Refinancing currently makes up about four out of every five mortgage applications, according to MBA figures. ARMs made up only 4 percent of all mortgage applications last week, consistent with recent trends.

First published at: http://www.mortgageloan.com/mortgage-rates-find-new-lows-again-9301