Oct. 1, 2010 -- After near stasis for the past six weeks, mortgage rates again managed a bit of a decline amid mixed economic messages. Increasing speculation that the Fed will initiate substantial purchases of Treasury bonds (so-called "quantitative easing") to kick-start the economy from its bare expansion helped to drive interest rates a bit lower.
HSH's overall mortgage monitor -- our weekly Fixed-Rate Mortgage Indicator (FRMI) -- saw the average rate for 30-year fixed-rate mortgages shed five basis points to begin October at 4.70%. Important to first time homebuyers and low-equity refinancers alike, 30-year FHA-backed mortgages sported an average of 4.40% for the week. The overall average for Hybrid 5/1 ARMs declined by six basis points (.06%), finishing our national survey at 3.61%. HSH.com's FRMIs include rates for conforming, jumbo, and most recently the GSE's "high-limit" conforming products and so covers much of the mortgage-borrowing public.
We mention above that the economic news seems more mixed to us. It wouldn't be hard to improve upon second quarter GDP, which came in at a final reckoning of 1.7%, but there does seem to be a mild overall uptick (or at least greater stability) in the news for September, the final month of the third quarter.
There can be no doubt that 3Q10 will be a weak one overall, but to us, much of the weakness seemed to be concentrated in July and August.
The big employment report doesn't come until next week, and it's the big gorilla in a fairly empty room.
Stock and bond markets enjoyed unexpectedly favorable conditions in September, which is not noted to be a historically great period for equities. October's been known to be a difficult period, too, but if September's any indicator, perhaps the markets are simply becoming accustomed to being in active crisis, and can find reasons to celebrate when we're not. Here's hoping that the rally's got more substance behind it than that, but there's nothing wrong with a little optimism showing somewhere.
P.S. If you missed it over the last few weeks, you should have a look at our plan to help responsible homeowners who are underwater. Unlike the "FHA Short Refi" idea, the concept doesn't penalize homeowners or investors... and there might even be no cost to taxpayers, either. Curious?
Read HSH.com's Value Gap Refinance idea: http://www.hsh.com/ValueGapRefi.html
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Susan Grant, David Lyng Real Estate, Santa Cruz to Carmel