The Mortgage Bankers Association announced that the mortgage refinance gauge decreased to 1,482.2, the lowest reading since November, from 2,116.3 the previous week. The home purchase index fell to 267.7 last week from a two-month high of 280.3. Unemployment, which touched a 26-year high in May, and rising borrowing costs discouraged homeowners from refinancing, while a growing number of home foreclosures sidelined potential buyers waiting for house prices to stop declining.
The share of home loan applicants seeking to refinance loans plunged to 46.4% of total applications last week from 54%. The average interest rate on a 30-year fixed-rate mortgage loan fell to 5.34% from 5.44% the prior week. The rate reached 4.61% at the end of March, the lowest level since the group’s records began in 1990. At the current thirty-year mortgage rate, monthly borrowing costs for each $100,000 of a loan would be $558, or about $62 less than the same week a year earlier, when the rate was 6.33%. Many loan officers have voiced their concern that market needs to keep conforming and FHA mortgage rates low until the housing sector can recover.
The Federal Reserve has positioned as a buyer in secondary mortgage markets that had seized up but are vital to enabling lenders to make new home loans. Mortgage lenders sell many of their loans to institutional investors, and higher rates charged by these investors to hold pooled bad credit mortgages make it more difficult for loan officers and mortgage brokers to offer lower rates on new mortgage loans. Conventional and FHA mortgage rates were both slightly lower than the previous week.
The gap has narrowed in just a few months between Treasuries and the mortgage rates that the agencies and mortgage lenders have to carry to make them attractive. Read the original article > Mortgage Interest Rates Drop.
Low mortgage interest rates continued this week amid mixed reports about the slowing economy, Freddie Mac’s chief economist said on Thursday. According to Freddie Mac chief economist Frank Nothaft, “Both the core producer price and consumer price indexes ticked up in January, higher than the market consensus, while consumer confidence in February dropped to the lowest reading since records began in January 1967,” said, in a news release. FHA mortgage rates remain low with 5.625% average on thirty year fixed rate home loans.
o Low Rate FHA Home Loans
o Mortgage Refinancing Tips
o Renegotiating Lower Mortgage Rates
o Home Equity lines of Credit
Thirty-year fixed-rate mortgages averaged 5.07% for the week ending February 26, up from last week’s 5.04% average but still lower than their 6.24% average a year ago, according to Freddie Mac’s weekly survey of conventional rates. Meanwhile, fifteen-year fixed-rate home loans averaged 4.68%, unchanged from last week and down from 5.72% a year ago.
5-year Treasury-indexed hybrid adjustable-rate mortgages averaged 5.06% this week, up from 5.04% last week; the ARMs averaged 5.43% a year ago. 1-year Treasury-indexed ARMs averaged 4.81% this week, up slightly from 4.80% last week; the ARMs averaged 5.11% a year ago. To obtain current mortgage rates, the fixed interest mortgage loans and the 5-year ARM required payment of an average 0.7 point, while the 1-year ARM required an average 0.6 point. A point is 1% of the mortgage amount, charged as prepaid interest.
In the news release Nothaft said “Reductions in home prices and affordable mortgage rates have yet to spur housing demand.” You can see how new sale prices continued to decline home. “For instance, house prices declined by 8.7% for the twelve months ending in December 2008 and were down 10.9% from their highs set in April of 2007, according to the Federal Housing Finance Agency’s purchase-only monthly home price index.
The Federal Reserve moved forward forging their plan to purchase mortgage bonds issued by Fannie Mae and Freddie Mac on Tuesday, saying it would start buying early next month and purchase up to $500bn (£345bn) by the end of June. The aggressive tactics – the Fed had previously said it would buy this amount over “several quarters” signifies the central bank’s determination to hammer down the risk spreads on the mortgage bonds and thereby reduce mortgage interest rates.
The Fed said “the program is being established to support the mortgage and housing markets and to foster improved conditions in financial markets more generally”. The move comes as policymakers at the central bank and in both the outgoing Bush and incoming Obama administrations look to target lower FHA mortgage rates in the hope that lowering them would halt the decline in house prices and thereby support financial asset prices.
Many Washington-based analysts think there is still a chance that Hank Paulson, the outgoing Treasury secretary, will announce plans for low-cost 4.5 % mortgages for new homebuying before leaving office, based on a plan proposed by Columbia University professors Glenn Hubbard and Chris Mayer. Barack Obama’s incoming economic team is also looking at ways to lower mortgage rates and ensure the availability of mortgage financing. Meanwhile, regulators are considering relaxing rules on mortgage refinancing in order to make it easier for borrowers with existing mortgage loans to take advantage of lower mortgage rates. The Fed is also focused on two other areas as it seeks to stimulate the economy – financing consumer loans and potential purchases of Treasury bonds. Read complete article written by Krishna Guha >
According to Primary Mortgage Market survey released by Freddie Mac, 30-year mortgage loans with fixed rate amortizations schedules dropped to their lowest level on record, Thursday. FHA mortgage rates declined again, along with conforming interest rates to nearly 5% for fixed 30-year loan terms.
The nationwide average interest rate for 30-year mortgage loans featuring fixed rate on a thirty year term was 5.19% for the week ending December 18, the lowest level since Freddie Mac began the survey in 1971. First mortgage rates were down from last week when it averaged 5.47 %. A year ago, the average for mortgage loans was 6.14%. Second mortgage rates still remain a few points higher than interest rates for 1st trust deeds. Amid the foreclosure crisis, second mortgages remain a high risk for mortgage lenders and investors.
The fifteen-year fixed-rate mortgage averaged 4.92 %, down from 5.2 % last week and 5.79 % a year ago. The fifteen-year mortgage rates have not been lower since April 1, 2004, when they averaged 4.84 %. According to a statement by Freddie Mac chief economist, Frank Nothaft “The rate drop was driven by the Federal Reserve announcement on December 16th, when it cut the federal funds target to a record low and stated it stood ready to expand the buying of mortgage loan assets as conditions warrant.”
Five-year Treasury-indexed hybrid adjustable-rate home loans averaged 5.60% this week, which is lower than the previous week that averaged 5.82%. A year ago, the five-year ARM averaged 5.90%. One-year Treasury-indexed ARMs averaged 4.94% this week, down from last week when it averaged 5.09%. At this time last year, the one-year ARM averaged 5.51%.
