Mortgage Rate Trends Lack of confidence in the Economy
By Brian O'Connell Posted October 12, 2009 found on mainstreet.com
Lack of confidence in the economy, particularly in the dollar, has mortgage
rates slipping back again this week, as lenders mull over more data that
indicate talk of an economic recovery could be premature.
Adding more anxiety to the mix are potential financial troubles at the Federal
Housing Administration and more disturbing news on U.S. home sales.
Let’s go right to the numbers. Rates declined across the board, with the
exception of one-year adjustable-rate mortgages — that number rose to 4.75%
from 4.4% last week, as measured by the BankingMyWay Weekly Mortgage Rate
Tracker.
Back up at the top of the scale are 30-year fixed-rate mortgages, which shaved a
few basis points, to 5.15% from 5.2% for the week. Fifteen-year mortgages
slipped to 4.54% from 4.6%.
Three- and five-year ARMs also fell to 4.59% from 4.65%, and to 4.54% from 4.6%,
respectively.
Increased activity in the mortgage market was a given, anyway, as the Dec. 1
deadline for the $8,000 new home tax credit draws closer. Congress may well
extend the deadline, but aggressive mortgage customers are taking nothing for
granted. The Mortgage Banker’s Association reports that mortgage applications
rose 16.4% during the past week, boosted primary by an 18% upward spike in
refinancings. But home values continue to be sluggish, indicating that buyers
can get some good deals, but sellers are having to bite the bullet.
As mentioned above, the U.S. dollar accounts for a good chunk of the slide in
mortgage rates this week. Like Tom Brady under siege by the Denver Bronco
defense yesterday, the greenback is getting pummeled by the euro and by Asian
currencies. As mortgage bonds are tied to the dollar, any slide in the dollar
usually means a slide in mortgage rates, and that’s what we're seeing these
days.
That could change if interest in U.S. bonds grows stronger. The 10-year U.S.
Treasury note is up to 3.39% this morning — that’s about 30 basis points
higher than where we saw bonds last Thursday afternoon. A stronger bond market
is one of the few economic catalysts that can propel mortgage rates upward, even
as the dollar struggles.
With that balancing act in play, there’s no significant impetus for mortgage
rates to move either way this week — at least in a meaningful way. So expect
more of the same going forward.
No matter what, get the best deal you can by checking out the best mortgage
rates on BankingMyWay.com.
—For the best rates on loans, bank accounts and credit cards, enter your ZIP
code at BankingMyWay.com.
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“There’s so much inventory out there that the buyer can pick and choose,” said Susan Sirles Fidler, a Realtor at Re/Max 10, Oak Lawn. But she cautioned, “The stuff that’s almost free is almost free because it’s going to cost you an arm and a leg to put it back together. It’s not buyer beware as much as buyer be smart.”
