Mortgage Rates Not Rising as Expected
December’s job figures proved to be the first serious indication that the economic recovery was not on as solid of a footing as hoped. That, combined with a Federal Reserve that has continued to reduce market supports, as well as economic weakness abroad, has resulted in investors all over the world seeking shelter within the safe-haven of U.S. Treasuries. This combination of events has caused mortgage rates to fall in the U.S.
Vice president of HSH.com, Keith Gumbinger, cautioned there is still only so much room for mortgage rates to fall.“In this kind of environment, and with so many challenges evident, it is very difficult for interest rates to firm, but absent true calamity, there are limits on how far they can fall.”
Mortgage Rates at Monthly Lows
Mortgage rates of all stripes declined:
- 30-year: The overall average rate for 30-year fixed-rate mortgages (conforming, non-conforming and jumbos) declined by seven basis points (0.07 percent) to land at 4.38 percent. This is its lowest level since the week ending Nov. 22, 2013.
- 15-year: The overall average rate for 15-year fixed-rate mortgages (conforming, non-conforming and jumbos) fell by five basis points (0.05 percent) to 3.53 percent.
- FHA: FHA-backed 30-year fixed-rate mortgages declined by seven basis points, landing at 4 percent.
- ARMs: The overall 5/1 Hybrid ARM rate declined by four basis points (0.04 percent) to an attractive rate of 3.09 percent.
Mortgage Rates Fall
The lack of economic growth here as well as abroad has allowed mortgage rates to fall. Gumbinger noted that the declining-mortgage-rates ride may have come to an end, at least in the short term. “With investors moving funds to riskier propositions, underlying interest rates which influence mortgages not only stopped declining but have nudged higher over the last few days. Based on that, it would seem that the nice little fall in mortgage rates is coming to an end, at least for now. We expect a little firming for rates [this] week …”