While recent indications point to overall improvement in the economy, mortgage rates moved however slightly this week. Additionally, inflation remained in check week over week. A report recently released by Freddie Mac revealed the average rate on a 30-year fixed-rate mortgage was 4.81 percent this week, with an average of .8 points. Interestingly, the average rate for the same product one year ago was 5.01 percent. However, the record low, from November, 2010, was 4.17 percent.
For a 15-year fixed-rate mortgage, the average rate was 4.08 percent with an average of .8 points, while the average rate one year ago for this product was 4.40 percent. Again, the record low of 3.57 percent was documented in November, 2010.
Although mortgage rates are up significantly from November, they are still considerably lower than February, 2010. If rates are still lower today when compared to this time last year, why is the number of mortgage applications down so appreciably? Mortgage experts believe the drastic reduction in the number of Americans purchasing or refinancing is twofold.
- Most homeowners who are eligible to refinance have already done so
- Mortgage rates have increased rather sharply in a very short period of time
Based on Freddie Mac’s report, the average mortgage rate on a 30-year fixed-rate mortgage jumped by .64 percent in a two-month span. And that’s with rates coming back after a much more significant spike during the second week of December when the rate on a 30-year fixed-rate mortgage was closer to 5.25, paying no points.
As the economy continues to improve, with the standard based on consumer spending, mortgage rates typically rise. With such little movement on the mortgage rate front this week, this event is an exception rather than the rule. Mortgage professionals are anxiously waiting for spring with optimistic anticipation that the floodgates will open on existing foreclosed properties. While most of the nation lingers in the grips of Old Man Winter, only time will tell.