Mortgage Interest rates remain essentially unchanged

Mortgage Interest rates remained essentially unchanged this week. The following are excerpts from the newsletter on interest rates published by HSH Associates :

" Sometimes, no news is good news. That might be the lesson taken from the markets lately, since there has been little significant good or bad news to cause disruption. Given the upward trend in stock prices and the accompanying rise in some interest rates, perhaps quiet is just what the market needs to calm nerves frazzled by months of varying crises. It's either that, or perhaps folks have just given up and gone on vacation.

Either way, mortgage rates have lifted slightly off record low bottoms, and absent any new fiscal tragedy or worsening of an old one we may not revisit those lows anytime soon. Of course, given the present state of affairs, we're certain not to wander to far from them, either, and so far, we haven't.

Interest rates for mortgages of course remain outstanding. At this stage of the game, and for many potential borrowers, it's less about the price of mortgage money than the availability of it. With Fannie and Freddie really the only secondary market game in town, there's no competition per se, and their underwriting standards remain pretty stiff. That was largely reflected in the latest survey of Senior Loan Officers conducted by the Federal Reserve, which found that residential lending standards for prime-quality mortgages were unchanged in the second quarter of 2012. Without the GSEs loosening underwriting requirements, with no private market in which to sell loans, and with regulators peering over shoulders at every turn, lenders have no choice but to adhere to the rigid rules in place if they want to make mortgages. Ironically, mortgages are one of the few places that fee income and profits are coming from these days for banks, while at the same time likely the most significant source of their losses, too.

Just as on when they were plummeting to new depths, the rise in Treasury rates has had little effect on mortgage rates. There is much less of a lockstep relationship between the two instruments than at other times over the last 10-20 years and with the Federal Reserve manipulating the market there is no longer a true expression available, regardless. Mortgage rates are bouncing along bottoms, and are likely to continue to for at least a while yet as there is no discernable direction for the economy, here or abroad. A more robust slate of economic data is due next week, including some housing data, but there's nothing likely to move rates out of their present rut."

 The following are interest rate quotes from Al Hermann of American California Financial :