Mortgage Rates Inch Closer to All-time Record Lows Again
Mortgage rates continue its downward trend. Its now close to the all-time record lows. Freddie Mac Primary Mortgage Market Survey® (PMMS®), reported average fixed mortgage rates moving lower for the fourth consecutive week. The 15-year fixed-rate mortgage hit a new all-time record low at 2.61 percent for the week, as did the 5-year ARM at 2.58 percent. The previous record low for the 15-year fixed was 2.63 percent set the week of November 21, 2012.
- 30-year fixed-rate mortgage (FRM) averaged 3.40 percent with an average 0.8 point for the week ending April 25, 2013, down from last week when it averaged 3.41 percent. Last year at this time, the 30-year FRM averaged 3.88 percent.
- 15-year FRM this week averaged 2.61 percent with an average 0.7 point, down from last week when it averaged 2.64 percent. A year ago at this time, the 15-year FRM averaged 3.12 percent.
- 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.58 percent this week with an average 0.5 point, down from last week when it averaged 2.60 percent. A year ago, the 5-year ARM averaged 2.85 percent.
Frank Nothaft, vice president and chief economist, Freddie Mac said – “The housing market is getting a boost with mortgage rates hovering at or near record lows. For instance, existing home sales averaged an annualized pace of 4.94 million over the first three months of this year, the most since the fourth quarter of 2009. More impressively, new home sales topped 424,000 during the first quarter, which was the strongest since the third quarter of 2008.”
The big reasons for low mortgage rates are low inflation levels, lower than expected GDP growth for China and at best tepid GDP growth in the US. Soft economic news impacts stocks negatively and boosts bond prices. Mortgage backed securities (MBS) gained 30 basis points on Friday and 39 basis points for the week. The increase in MBS means lowering of mortgage rates.
Outlook for Mortgage Rates – The near term outlook for mortgage rates continue to be positive. It could be difficult for rates to slide further. I also don’t see rates going any higher. The market will be sensitive to different economic news. Hence we will see volatility on a daily basis. But overall, the rates should remain fairly stable and trade in .125% range in next few weeks.