Two separate industry reports released Thursday show that mortgage interest rates across the board retreated this week, beginning the new year slightly lower than levels seen at the end of 2010, and still well below where they sat at the beginning of last year even with the sharp run-ups witnessed during November and December.
Frank Nothaft, VP and chief economist for Freddie Mac, says the downward movement, however slight, "should help aid the recovery in the housing market." Nothaft is expecting long-term mortgage interest rates to hold below the 5 percent threshold throughout 2011, although some degree of ups and downs is likely over the course of the year.
Freddie Mac's latest rate survey found that for the week ending January 6, 2011, the 30-year fixed-rate mortgage averaged 4.77 percent (0.8 point). That's down from 4.86 percent the previous week. A year ago at this time, the 30-year rate was 5.09 percent.
The average rate on a 15-year fixed mortgage came in at 4.13 percent (0.8 point) in the GSE's study, down from 4.20 percent last week. By comparison, during the first week of 2010, the 15-year rate was reported to be 4.50 percent.
Short-term rates also dropped this week in Freddie Mac's survey. The 5-year adjustable-rate mortgage (ARM) fell from 3.77 percent last week to 3.75 percent (0.7 point). The 1-year ARM slipped from 3.26 percent to 3.24 percent (0.6 point). Both were above the 4 percent mark this time last year.
Freddie Mac's weekly rate survey is based on data gathered from about 125 lenders across the country. A separate study released by Bankrate Thursday, which derives its figures from data provided by the top 10 banks and thrifts in the top 10 U.S. markets, also showed declines for both long- and short-term loan products.
According to Bankrate's survey, the benchmark conforming 30-year fixed-rate fell back to 4.94 percent (0.42 point) for the week ending January 6. That's down from 5.02 percent reported the week before.
The average 15-year fixed mortgage retreated to 4.32 percent (0.41 point), falling from 4.39 percent last week, while the larger jumbo 30-year fixed rate dropped from 5.64 percent to 5.59 percent.
Adjustable rate mortgages were mostly lower, as well, with the average 3-year ARM sinking to 3.9 percent and the 5-year ARM dipping to 3.99 percent in the tracking company's study.
"After a sharp run-up in mortgage rates that started in early November, mortgage rates have spent the past month bouncing back-and-forth over the 5 percent mark," Bankrate noted in its report. "While mortgage rates stayed range-bound through the holiday season, the tone of economic data has been decidedly better and a looming jobs report could push mortgage rates higher if it shows evidence of increased hiring."
Bankrate surveys a panel of mortgage experts each week to gauge which direction they think rates will head. Half of the panelists this week said they expect mortgage rates to climb over the next seven days, while 31 percent say they'll remain essentially unchanged.
DSNews.com
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