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Entries in Mortgage Rates (18)

Thursday
May302013

With Mortgage Rates Rising, Homeowners Consider Refinancing

Comstock/Thinkstock(WASHINGTON) -- With fixed mortgage rates the highest in a year, homeowners may have missed the boat on the record-low mortgage rates of the last year, but there's no need to panic if you're still considering refinancing, said Frank Nothaft, vice president and chief economist with Freddie Mac.

"Even if rates are up half a percentage point, they are still unbelievably low," Nothaft said.

Rates are rising, says the Mortgage Bankers Association, "in response to stronger economic data and an increasing chance that the [Federal Reserve] may soon begin to taper their asset purchases." For more than a year, the Fed has been buying bonds to drive down interest rates and spur the economy.

As mortgage rates rise, it's still hard to believe there were double digit 30-year mortgage rates through much of the 1980s, including 18.63 percent in Oct. 9, 1981. The lowest 30-year fixed-rate was 3.31 percent on Nov. 21, 2012.

Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 3.81 percent during the week that ended May 30, up nearly half a percentage point since the beginning of May when it averaged 3.35 percent. Last week, it averaged 3.59 percent and last year at this time it averaged 3.75 percent.

The 15-year rate averaged 2.98 percent, up from 2.77 percent the previous week and 2.97 percent a year ago. Meanwhile, home prices rose the most since 2006, according to housing data released by S&P/Case-Shiller this week.

Nothaft said he had expected mortgage rates to move higher starting in the middle of this year or second half of 2013.

"I think the low rates that we had seen over the last year -- I think that will be history," he said.

He said he expects fixed mortgage rates to "hover" around 4 percent for the year. In 2014, he expects rates to be above 4 percent.

"They bounce around every single day. It's possible there will be a day this year they hit 4 percent. But on average, I think they'll hover around where they are," he said.

When asked if he had advice for homeowners considering refinancing their homes, Nothaft said if refinancing is financially attractive to homeowners now, they should submit an application to do so.

"If you're on the fence and considering refinancing, I don't think there's reason for you to wait further," he said.

Nothaft said consumers must calculate how they would feel if experts like him are wrong and rates do indeed go up half a percentage point.

"It's very difficult to outguess the unknown future. If it's attractive today, don't put it off, get it done now," he said.

Freddie Mac cautions that average fees and points reflect the total upfront cost of obtaining a mortgage, plus borrowers may pay closing costs not reflected in their survey.

The Federal Reserve offers homeowners three tips about when it is not a good idea to refinance:

1. You've had your mortgage for a long time.

"By refinancing late in your mortgage, you will restart the amortization process, and most of your monthly payment will be credited to paying interest again and not to building equity," the Fed says.

2. Your current mortgage has a prepayment penalty.

"Paying a prepayment penalty, which some lenders charge if you pay your mortgage loan early, will increase the time it will take to break even, when you account for the costs of refinancing and the monthly savings you expect to gain," says the Fed.

3. You plan to move from your home in the next year or two.

According to the Fed, "The monthly savings gained from lower monthly payments may not exceed the costs of refinancing."

Copyright 2013 ABC News Radio

Wednesday
Nov212012

Mortgage Rates Drop to Record Low Again

Comstock/Thinkstock(NEW YORK) -- Fixed mortgage rates dipped to a record low for the second consecutive week as borrowing costs remain low to support the housing recovery.

The 30-year fixed-rate mortgage fell to 3.31 percent for the week ending Nov. 21, from last week’s 3.34 percent, according to Freddie Mac.  It's also down from a year ago when it was 3.98 percent.

The 15-year fixed-rate mortgage dropped to 2.63 percent from 2.65 percent last week and 3.3 percent a year ago at this time.

Freddie Mac supports one in four home buyers with financing.

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

On Tuesday, the Commerce Department reported that construction on new homes rose 3.6 percent in October to an annual pace of 894,000 -- the best rate since July 2008.

Existing home sales increased 2.1 percent in October to an annualized pace of 4.79 million, which was higher than expected.

Copyright 2012 ABC News Radio

Thursday
Oct042012

Mortgage Rates Hit Record Low for Second Week

Digital Vision/Thinkstock(NEW YORK) -- Mortgage rates reached an all-time low for the second consecutive week amid the Federal Reserve’s purchase of securities and “indicators of a weakening economy,” government-sponsored Freddie Mac said Thursday morning.

The weekly average for the 30-year fixed-rate mortgage in the U.S. fell to 3.36 percent for the week ending Oct. 4, down from 3.4 percent last week and 3.94 percent a year ago.

The 15-year fixed-rate mortgage dropped to 2.69 percent from 2.73 percent last week and 3.26 percent a year ago.

Last month, the Federal Reserve announced a stimulus measure of quantitative easing, saying it anticipates low interest rates through mid-2015.

“Fixed mortgage rates fell again this week to all-time record lows due to the mortgage securities purchases by the Federal Reserve and indicators of a weakening economy,” said Frank Nothaft, vice president and chief economist of Freddie Mac, in a statement.

Those economic indicators included a lower-than-expected revision of growth in GDP, down to 1.3 percent for the second quarter.

Also, personal incomes rose only 0.1 percent in August while the increase for July was revised lower.

Pending home sales in August fell 2.6 percent, “well below the market consensus forecast of a slight increase,” Nothaft said.

The low rates are causing a burst in refinancing applications.  The Mortgage Bankers Association announced Wednesday that refinancing applications are at their highest level since April 2009.

But it’s still hard to get a loan -- 40 percent of all refinancing applications fall apart, according to the Mortgage Bankers Association.  Many borrowers do not qualify for new loans because of credit scores or income.  Banks are reluctant to lend because they are worried they may be forced to buy back bad loans from Fannie Mae and Freddie Mac.

Copyright 2012 ABC News Radio

Tuesday
Oct022012

LIBOR Proposals Unlikely to Affect US Borrowers Soon

Digital Vision/Thinkstock(NEW YORK) -- A proposal to revamp the London Interbank Offered Rate, or LIBOR, could restore some confidence in the global interest rate that is widely used for bond yields and mortgage rates in the U.S., analysts say.

The British regulator, the Financial Services Authority, outlined a 10-point plan on Friday that proposed new regulation of the rate, including taking away responsibility from the British Bankers' Authority, which oversees it.

The British bank, Barclays, and other U.S. and British agencies have admitted to submitting false information that is used to set the LIBOR.  Barclays' chief executive Bob Diamond resigned as a result of the scandal that erupted earlier this year.  The bank paid a fine of $453 million to the U.S. Commodity Futures Trading Commission and British regulators.

The BBA sets the LIBOR each morning with estimates from several global banks regarding what it costs them to borrow.

The FSA's review, led by its managing director Martin Wheatley, proposed that banks should be required to provide evidence of their estimates with relevant transactions.

Other banks, including JPMorgan Chase and Citigroup Inc., have been investigated by U.S. regulators for possibly falsifying information.

The BBA said in a statement after the proposal was published that it worked "very closely with the Wheatley Review of LIBOR and believes [Friday's] report is an essential step."

"The BBA has strongly stated the need for greater regulatory oversight of LIBOR, and tougher sanctions for those who try to manipulate it.  The BBA Council has indicated it would support any recommendation that responsibility for LIBOR ... be passed to a new sponsor," the British trade group said in a statement.

Mark D. Luschini, chief investment strategist for the broker-dealer Janney Montgomery Scott, said the various regulatory authorities were trying to restore credibility to the global instrument upon which interest rates and contracts are set.  While it's possible that bankers' false estimates have affected previous interest rates for better or worse, Luschini said the most recent proposals regarding LIBOR are not likely to affect it in the near future.

"That's not likely to be disruptive to bond yields and bond convents already in place.  That would be ridiculous," he said.

If anything, the LIBOR will likely have more regulatory oversight and policing in its calculation "as opposed to the looser formula that allowed for the manipulation that inspired the investigation to begin with," Luschini said.

Copyright 2012 ABC News Radio

Thursday
Jul262012

Mortgage Rates Fall Once Again

Digital Vision/Thinkstock(NEW YORK) -- Those incredible shrinking mortgage rates fell once again in the past week to yet another record low of 3.49 percent for a 30-year fixed loan, Freddie Mac reported on Thursday.

The 15-year fixed-rate mortgage fell to 2.8 percent from 2.83 percent the previous week.

“Market concerns over the strength of the economic recovery brought long-term Treasury yields to new lows this week allowing fixed mortgage rates to reach record levels,” Frank Nothaft, vice president and chief economist at Freddie Mac, said in a statement. "The Conference Board Leading Economic Index showed the largest monthly decline in June since September 2011.  Existing home sales fell to 4.36 million homes (annualized) in June and represented the slowest pace since October 2011.  Similarly, new home sales fell in June to their lowest level since January of this year.”

Five-year adjustable rate mortgages (ARMs) are at 2.74 percent and one-year ARMs are at 2.71 percent.

The Federal Reserve has been keeping interest rates near zero in an effort to stimulate the economy and has said the low rates will continue until at least through late 2014.

Rates vary by state and individual credit scores. Bankrate.com has a full listing of local mortgage rates as well as bank deposit rates.

Copyright 2012 ABC News Radio

Thursday
Jul122012

Mortgage Rates Hit Another Record Low

iStockphoto/Thinkstock(WASHINGTON) -- The average fixed mortgage rates reached all-time record lows again following June’s poor unemployment report.

Freddie Mac reported the 30-year fixed-rate mortgage fell to 3.56 percent for the week ending July 12, from last week when it averaged 3.62 percent and a year ago when it was 4.51 percent. The 15-year rate averaged 2.86 percent, down from 2.89 percent last week and 3.65 percent one year ago.

Both averages were all-time record lows, according to the government-created mortgage financing agency.

The average 30-year fixed rate has been under 4 percent for 16 weeks and the average 15-year rate has been below 3 percent for seven weeks.

Copyright 2012 ABC News Radio

Thursday
Jul052012

Mortgage Rates: Another Record Low

Zoonar/Thinkstock(WASHINGTON) -- Average fixed mortgage rates continued to fall to all-time record lows amid stalled consumer spending and manufacturing activity, government-sponsored Freddie Mac reported today.

The 30-year fixed-rate mortgage averaged 3.62 percent for the week ending July 5, down from last week’s 3.66 percent. Last year, at this time it was 4.6 percent.

The 15-year fixed-rate mortgage averaged 2.89 percent, down from last week when it was 2.94 percent. Last year, the 15-year mortgage rate was 3.75 percent.

“Recent economic data releases of less consumer spending and a contraction in the manufacturing industry drove long-term Treasury bond yields lower over the week and allowed fixed mortgage rates to hit new all-time record lows,” said Frank Nothaft, Freddie Mac vice president and chief economist.

In the final first quarter estimates for GDP, growth in personal expenditures was revised downward to an annualized rate of 2.5 percent. Monthly consumer spending in April was revised to 0.1 percent from a 0.3 percent gain and was unchanged in May.

The Institute for Supply Management reported that manufacturing shrank in June, the first decline since July 2009.

Copyright 2012 ABC News Radio

Thursday
Jun212012

Nationwide Mortgage Rates Fall 

iStockphoto/Thinkstock(NEW YORK) -- According to Freddie Mac, the average 30-year fixed mortgage is at the lowest ever rate for the seventh time in eight weeks.

The rate is now 3.66 percent down from 3.71 percent last week. The average rate on 15-year fixed mortgages is 2.95 percent, nearly matching the record-low rate of 2.94 percent from two weeks ago.

Chad Wandler, a spokesman for Freddie Mac, says, "The Fed’s extending Operation Twist means we are in for very low mortgage rates for a while to come, so for people who are looking to buy or refinance this is great news.”

Copyright 2012 ABC News Radio

Thursday
Jun072012

Mortgage Rates Boast Six Week Streak of Record Lows

Zoonar/Thinkstock(WASHINGTON) -- The average rate on a 30-year mortgage dropped to a record-low of 3.67 percent, while the 15-year rate is down to 2.94 percent. This is the sixth straight week of record lows for fixed rate mortgages.

Homeowners are not always able to take advantage of these low rates because they don’t have good enough credit to qualify.  Borrowers also often face long delays dealing with their lenders.

That said these low rates could be a silver lining in an otherwise tough economy as the spring buying season kicks off.

Some economists believe the U.S. housing market has bottomed out and is now in the midst of a slow recovery.

Mortgage applications rose by 1.3 percent during the week ended June 1, the Mortgage Bankers Association reported Wednesday, mainly because more people applied to refinance their homes.  Applications to buy a home fell for the fourth straight week.

Copyright 2012 ABC News Radio

Thursday
May242012

Mortgage Rates Fall Again

Zoonar/Thinkstock(WASHINGTON) -- Right now could be the best time to buy a home – if you qualify. Prices are close to 10-year lows in most markets, and rates for 30-year fixed mortgages are at their cheapest ever.

Mortgage buyer Freddie Mac says the average rate on a 30-year loan fell to 3.78 percent, the lowest since long-term mortgages began in the 1950s.

The average for 15-year fixed mortgage, a popular option for refinancing, held steady at 3.04 percent, matching the record low hit last week.

Lower rates are a key reason the housing industry is showing early signs of a recovery five years after the bubble burst and the market collapsed.

Last month’s sales of both previously occupied homes and new homes rose near two-year highs. Builders are gaining more confidence, breaking ground on more homes and requesting more permits to build single-family homes later this year.

A modest improvement in the job market has also made more people open to buying a home. Employers have added 1 million jobs in the past five months.

But total home sales are still well below normal. Economists say it could be years before the market is fully healed. One big reason is banks that were burned by the 2008 financial crisis are now much more conservative about lending money to prospective home buyers.

Mortgage rates have been dropping because they tend to track the yield on the 10-year Treasury note. Uncertainty about how Europe will resolve its debt crisis has led investors to buy more Treasury securities, which are considered safe investments. As demand for Treasurys increase, the yield falls.

Copyright 2012 ABC News Radio







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