Home loans rates drop again in Freddie Mac survey

 
Fixed-rate mortgages continued their descent into record territory early this week, but now may be poised to move higher again.

Lenders surveyed Monday through Wednesday were offering the 30-year loan at an average 4.09% and the 15-year mortgage at 3.30%, Freddie Mac said in its weekly report. Those were the lowest levels since the big mortgage-finance company started tracking the 30-year loan in 1971,

The rates were down from 4.12% and 3.33% respectively a week earlier. Borrowers would have paid 0.7% in lender fees to obtain the 30-year loan and 0.6% for the 15-year mortgage, Freddie Mac said in releasing the report Thursday.

Treasury-bond yields, a benchmark for mortgage rates, sank to near-record lows last week as harried investors sought safety in government securities, with the 10-year note generally yielding less than 2% annual interest and closing below that level Monday and Tuesday.

But rates may be reversing course: the yield on the 10-year bond rose Wednesday and was up sharply early Thursday to 2.09% as European leaders and central banks appeared more ready to address the ongoing debt crisis.

The all-time record lows for home loans were set 60 years ago, Freddie Mac said.

Long-term fixed-rate mortgages backed by the Federal Housing Administration averaged 4.08% for several months in 1950-51, according to the National Bureau of Economic Research. The same survey shows long-term rates at 4.09% in June of 1950. 

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Photo: Freddie Mac's McLean, Va., headquarters. Credit: Freddie Mac

 

Mortgage rates hit record lows in Freddie Mac survey

Mortgage rates have plunged to all-time lows amid concerns the economy is stalling again, Freddie Mac said in its weekly survey.

Lenders were offering the 30-year fixed-rate home loan at an average rate of 4.12% this week, down from 4.22% last week, Freddie Mac said Thursday. The 15-year fixed loan was at 3.33%, down from 3.39%.

Both of the rates set records in the survey by the giant mortgage finance company. Borrowers would have paid an average of 0.7% of the loan amount in upfront lender fees and points on the 30-year loan and 0.6% on the 15-year loan, Freddie said.

 Adjustable-rate loans set records or tied previous lows as well, the survey found.

"On net, the economy added no new jobs last month and was the weakest reading since September 2010," Freddie Mac chief economist Frank Nothaft said in a news release.

"Meanwhile, the unemployment rate remained at 9.1%, marking its 31st consecutive month of being above 8%, the longest such stretch in 70 years."

The rate on the 30-year fixed loan had bumped above 5% last February before slowly grinding lower.

It has now been below 4.5% for six straight weeks, setting a previous low record of 4.15% in the Aug. 18 survey. (Freddie Mac began tracking the 30-year loan in 1971.)

The survey asks lenders for popular combinations of rates and fees that they are offering to borrowers with good credit and 20% down payments or 20% home equity in refinancings. Well-qualified borrowers who shop around often obtain slightly better deals.  

The low rates still aren't exactly generating a new boom in home lending, the Mortgage Bankers Assn. says.

The trade group's latest survey of mortgage applications said they fell by about 5% last week compared with the previous week -- the third straight week of declining demand. From the MBA news release Wednesday:

"Heading into the Labor Day weekend, the 30-year rate was at its second lowest level in the history of our survey (the low point was reached last October), and the 15-year rate marked a new low in our survey," said Mike Fratantoni, MBA’s Vice President of Research and Economics.

"Despite these rates however, refinance application volume ... is more than 35% below levels at this time last year. Purchase application volume remains relatively flat at extremely low levels, close to lows last seen in 1996."

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Freddie Mac: Mortgage rates scrape bottom again

 

Mortgage rates are scraping along near historic lows, Freddie Mac says in its latest survey of what lenders are offering to well-qualified borrowers.

The 30-year fixed-rate mortgage averaged 4.22% early this week, the same as the week before, and just above the 4.15% record low reached two weeks ago.

The rate on a 15-year fixed mortgage dropped to 3.39% this week from 3.44%.

Borrowers on average would have paid lenders 0.7% of the loan amount upfront to get a 30-year loan and 0.6% on a 15-year loan, said Freddie Mac, the giant government-controlled finance company.

Rates for loans that become adjustable after five years fixed set all-time lows for the eighth straight week, Freddie Mac said. Such loans indexed to Treasury bonds had a starting rate of 2.96% this week, down from 3.07% last week. The lender fees averaged 0.6%, Freddie said.

Economists said weaker economic signals and slowing home sales were keeping rates low. There's little immediate fear of inflation and the Federal Reserve has said it expects to hold its benchmark short-term rate close to zero through the middle of 2013.

"In addition," Freddie Mac economist Frank Nothaft said Thursday, "consumer confidence in August fell to the lowest reading since April 2009."

The result? An early-August surge of interest in mortgages, driven by homeowners refinancing at rates under 4.5%, appears to be running low on steam.

A Mortgage Bankers Assn. survey of mortgage applications, released Wednesday, showed the volume decreasing for a second straight week.

The lobbying group has revised its projections of mortgage volume for this year because of the refinancings. It now expects $1.1 trillion in residential mortgages to be originated in 2011, $100 billion more than earlier forecasts.

But adjustments for the weak economy have the home-lending association reducing its outlook for 2012. The group cut its forecast for mortgage volume next year to just $931 billion, which would be the lowest since 1997.

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Fixed mortgage rates up a bit; 5-year hybrid loan at record low

 

Fixed mortgage rates edged back up this week from record lows, but a popular type of variable-rate loan remained in record territory, according to Freddie Mac's weekly survey of lenders.

Five-year hybrid adjustable loans, which have a fixed rate for the first five years, were being offered at initial rates averaging 3.07% this week, Freddie Mac said in a report Thursday, down a touch from the previous record of 3.08%. The borrowers would have paid 0.5% of the loan amount to lenders in upfront fees.

At that rate, the monthly principal and interest payment on a $400,000 mortgage would be $1,701.55, although homeowners also are on the hook for property taxes and insurance.

And of course, a five-year hybrid means exposure to whatever interest rates may be when the loans become adjustable -- and they are not likely to be as favorable as today.

Mortgage rates take their cues from Treasury bonds, and the yield on the benchmark 10-year Treasury was at 2.25% Thursday morning -- up sharply from earlier this week but still astonishingly low by historical standards.

Most people these days are seeking out the certainty of fixed-rate mortgages. Freddie Mac said the lenders it surveyed were offering 30-year fixed home loans early this week at an average 4.22% with 0.7% in lender fees, up slightly from last week's 4.15%, which was the all-time low since Freddie Mac began its survey in 1971.

At 4.22%, the monthly principal and interest payments on a 30-year fixed mortgage of $400,000 would total $1,960.74, a mortgage calculator shows.

Low rates alone can't heal housing, of course. Even as fixed rates hit record lows last week, fewer people were applying for mortgages, the Mortgage Bankers Assn. said in a report. Applications to purchase homes are at their lowest level since 1996, the MBA said.

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Photo: Foreclosures have fallen, but newly delinquent loans have increased and home sales remain slow. Credit: Associated Press / David Zalubowski.

Mortgage rates set fresh record low, Freddie Mac says

Mortgage rates tumbled to the lowest level in the history of Freddie Mac's weekly survey, with 30-year fixed-rate home loans being offered this week at an average 4.15%, down from last week's 4.32%.

Freddie Mac said in its weekly report that loans with variable interest rates also hit record lows, as did shorter-term fixed-rate loans. The 15-year fixed-rate loan, a popular choice with people refinancing their homes, was being offered at an average rate of 3.36%, down from 3.50% last week, Freddie Mac said.

The survey includes loans made with minimal payments of fees and points to lenders. The borrowers getting 30-year loans this week would have paid 0.7% of the loan amount in upfront fees and discount points, and borrowers would have paid 0.6% of the loan amount for the 15-year fixed loans, Freddie Mac said.

The rates, available to the lucky folks who have weathered the recession and housing debacle in solid financial shape, are the lowest since Freddie Mac's survey began in 1971 -- and almost as low as anyone can recall.

Long-term fixed-rate mortgages backed by the Federal Housing Administration averaged 4.08% for a several months in 1950-51, according to the National Bureau of Economic Research. FHA loans, which have additional costs, are available to people who are riskier credits than those in the Freddie Mac survey. 

Long-term mortgage rates tend to track the yield on the 10-year Treasury note, which has tumbled in recent weeks as investors bailed out of the stock market and loaded up on Treasuries, seeing them as a less-scary investment option.

The Freddie Mac survey's previous low for the 30-year loan was 4.17%, recorded last November after the Fed said it would buy $600 billion in Treasury securities, creating demand that drove down the 10-year T-note's yield.

This week's drop in loan rates came on the heels of the Federal Reserve's announcement last week that it expected to keep short-term interest rates low for at least two more years because of the economy's faltering recovery.

Despite the low rates, the housing market remains sluggish. About 70% of all home-loan applications in the first half of this year were for refinancings, not home purchases, Freddie Mac economist Frank Nothaft said.

Freddie Mac surveys lenders across the nation each week from Monday through Wednesday, asking them for the combination of rates and fees they are providing on popular mortgages.

The rates are available only to borrowers with solid credit, enough verifiable income to support payments and a 20% down payment for a purchase or 20% home equity for a refinancing.

Well-qualified borrowers who shop around often obtain slightly better rates, and it's possible to lower the rates further by paying additional upfront fees known as discount points.

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Consumer Confidential: Mortgage rates fall; Martha settles suits

Here's your through-the-looking-glass Thursday roundup of consumer news from around the Web:

--In the market for new digs or a refi? Fixed mortgage rates are at or near record lows. Freddie Mac says the average rate for the 30-year fixed mortgage fell to 4.32% this week from 4.39%. The 30-year loan hit a record low of 4.17% in mid-November. The average rate on a 15-year fixed mortgage, a popular refinancing option, fell to a record low of 3.5% from last week's record rate of 3.54%. Mortgage rates tend to track the yield on the 10-year Treasury note. A weakening U.S. economy has led many investors to shift money from stocks to bonds, which are seen as safer bets. That has pushed Treasury yields to historic lows. In theory, low mortgage rates should provide a boost to the troubled housing market. But rates have been below 5% for nearly two years and haven't helped home sales much. Rates on the 30-year fixed loan were near 6.5% five years ago and higher than 8% in 2000.

--There's been a settlement in lawsuits filed by three people who had parts of fingers snipped off by Martha Stewart lounge chairs sold at Kmart stores. Des Moines attorney Guy Cook says the cases against Martha Stewart Living Omnimedia and Kmart were settled this week. Cook's clients, a young Kentucky girl, an Illinois college student and a New York woman, claimed the chairs cut off parts of their fingers. Cook argued that the chair's legs are defective and snap forward, "serving as a guillotine" for fingers caught between the chair and the legs. No word from Martha as to whether an end to the lawsuits is a good thing.

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Photo: Want this? Mortgage rates are near record lows. Credit: Joe Raedle / Getty Images

 

How low can mortgage rates go? Descent continues

Mortgage rates are continuing to fall amid economic uncertainties and a sagging stock market, with the 30-year home loan available this week at an average 4.32% -- the lowest fixed rate of the year, according to Freddie Mac.

The typical rate for a 15-year fixed mortgage was 3.50%, Freddie Mac said Thursday -- the lowest since Freddie began tracking it in 1991.

Despite 30-year rates averaging about 4.5% and the cheapest housing prices in eight years, home lending has slipped this year to the lowest level since 1997.

But with rates near record lows, the Mortgage Bankers Assn. says loan applications have spiked by more than 20% thanks to the latest surge in refinancings.

The increase occurred despite a slight decrease in applications to buy homes. Refinance applications were up by 30%, the trade group said Wednesday.

Greg McBride, senior analyst for rate tracker Bankrate.com, said people with large mortgages in expensive markets like California should feel a particular sense of urgency if they are considering refinancing.

As a result of the credit crisis, the limit for a conforming loan -- one that can be backed by Freddie Mac and Fannie Mae -- was increased to $729,750 in the most expensive regions to support the housing market. That increase is set to expire Oct. 1, when the conforming loan limit will fall back to $625,500.

Loans higher than the conforming limit, known as jumbos, are available -- but rates have been running at least half a percentage point more than for conforming loans. And as McBride pointed out, people refinancing into a jumbo loan are required to have more equity in their homes, typically 25% or 30% instead of the 20% requirement on smaller mortgages.

For someone refinancing a $700,000 loan, "It means you've got to get the loan closed by the end of September before the goal posts move," McBride said.

Freddie Mac surveys lenders early each week, asking them what conforming loan rates they are offering to borrowers with good credit and 20% down payments or, in the case of refinancings, at least 20% equity in their homes.

The borrowers in the latest survey would have paid 0.7% of the loan amount in upfront lender fees and discount points, along with additional payments for appraisals, title insurance and other third-party costs, Freddie Mac said.

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Morgan Stanley analysts outline plan for housing

America’s real estate market could be on an “unsustainable path,” faced with an oversupply of homes inaccessible to either renters or buyers. That’s what three Morgan Stanley analysts argue in a recent paper that outlines steps that can be taken to fix the sputtering housing market.

Mortgage credit remains tight, making home buying difficult. At the same time rents are rising quickly, pricing folks out of the market just as tens of thousands of borrowers are losing their homes to foreclosure every month.

The result of these twin occurrences could be “an oversupply of homes with nobody to purchase them,” a situation that is already starting to emerge, according to the research paper by the Morgan Stanley analysts, Oliver Chang, Vishwanath Tirupattur and James Egan. The three experts argue that tackling the backlog of so-called distressed properties is crucial.

A cornerstone of their plan is helping investors who would rent out those properties. They argue that in exchange for various incentives and access to the huge glut of foreclosed homes on the balance sheets of major financial institutions, investors must agree to upgrade those homes and offer flexible terms to renters, including lease-to-own programs. They also argue that tax incentives could be used to subsidize rents for lower-income renters.

On Wednesday, the Obama administration announced that it was seeking such ideas from investors for possible ways of managing the large number of foreclosed properties that are on the books of mortgage titans Fannie Mae and Freddie Mac. Selling foreclosed homes in bulk to investors who would then rent them out was one idea that the administration floated –- which is also part of the proposal by Morgan Stanley analysts.

The main hurdle confronting all of these ideas: the acceptance that American homeownership will probably decline.

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Freddie Mac: Mortgage rates down in the basement again

The typical rate on a 30-year fixed mortgage fell this week to 4.39%, the lowest level since November, according to home finance giant Freddie Mac, while other popular loans were at all-time lows in Freddie's weekly survey of lenders.

While that's welcome news for anyone willing and able to buy or refinance a home, the cause is the sputtering economy, which had investors bailing out of stocks and seeking protection in U.S. Treasury securities.

That trend drove the yield on the 10-year Treasury note to 2.58% Thursday morning -- it had been above 3.7% in February -- and home lending rates followed suit.

"The first half of this year was the worst six-month period since the economic recovery began in June 2009," Freddie Mac economist Frank Nothaft said.

He noted that consumer spending fell 0.2% in June, the first decline since September 2009.

The record lows were for 15-year fixed mortgages, a popular option for people refinancing their homes, and for loans with a fixed rate for five years that then become variable. The previous records for these mortgages also were set in November.

Lenders were offering the 15-year loan at an average of 3.54%, down from last week's 3.66% and eclipsing the previous low of 3.57% in the Freddie Mac survey.

The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.18% this week, down from 3.25% a week earlier, which had tied the previous low.

The average offering rate for 30-year fixed-rate mortgages had briefly dropped below 4.2% in the survey last fall. The 4.39% rate that Freddie reported Thursday was sharply below last week's 4.55%.

Borrowers would have paid less than 1% of the loan amount in upfront lender fees to obtain the rates, Freddie Mac said. Solid borrowers often can find slightly better rates by shopping around, and it's also possible to lower mortgage rates by paying more upfront.

Indeed, experts said this week that it was possible for the lowest-risk borrowers to obtain 30-year home loans with rates fixed at less than 4% -- as long as they were willing to fork over 3% or more of the loan amount in upfront fees and discount points to certain lenders.

The Freddie Mac survey asks lenders what terms they are offering to borrowers with good credit ratings who have 20% down payments or 20% equity in their homes.

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Photo: Freddie Mac headquarters in McLean, Va. Credit: Pablo Martinez Monsivais  / Associated Press