Category Archives: Mortgage Rates

What’s Ahead For Mortgage Rates This Week : June 18, 2012

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FOMC meets this weekMortgage markets improved last week, moving mortgage rates in Pennsylvania back on a downward trajectory. Wall Street investors bid down mortgage bond yields on weaker-than-expected economic data from the U.S. and concern for events within the Eurozone.

Freddie Mac reports the average 30-year fixed rate mortgage rate at 3.71% for borrowers willing to pay 0.7 discount points plus accompanying closing costs. 

It’s the second-lowest reading in Freddie Mac’s recorded history and, as a point of comparison, one year ago, the 30-year fixed rate mortgage averaged 4.50% nationwide.

A homeowner giving a $200,000 mortgage at last year’s 4.50% rate would have paid $1,013 monthly for principal + interest. Today, that same homeowner pays just $922 per month — nine percent less.

Mortgage rates may drop even more this week.

Sunday, in Greece’s bid to re-elect a government, a pro-bailout party won the most votes in a highly-watched election, dampening fears that Greece may leave the European Union. However, the winning party must still form a new government and it beat the “anti-bailout” party by just 3 points — 30% to 27%. Some analysts question whether Greece can form a coalition government within its required 3-day window.

If Greece fails to form a government, the nation-state’s future in the European Union will, again, be in doubt — a potentially positive development for U.S. mortgage rates.

Also this week, the Federal Open Market Committee meets for its fourth scheduled meeting of the year, a two-day event beginning Wednesday. The FOMC doesn’t set mortgage rates, but it does set U.S. monetary policy which can have an effect on mortgage rates. If the Federal Reserve votes to add new stimulus, mortgage rates may rise on concerns for inflation.

The FOMC is not expected to add new stimulus.

And, lastly, this week will see the release of several housing reports including the homebuilder confidence survey, the Existing Home Sales report, and the Housing Starts report. Strength in housing may be viewed as a plus for the economy, which can cause mortgage rates to rise.

Expect volatility this week as mortgage markets wrestle with events at home and abroad. This may be aprudent time to lock a floating mortgage rate. 

Mortgage Payments Fall To All-Time Lows

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Mortgage payments

It’s a money-saving time to be a King of Prussia home buyer. Historically, mortgage rates of all types — conventional, FHA, VA and USDA — have never been lower and low mortgage rates make for low monthly payments. 

According to Freddie Mac’s weekly mortgage rate survey, the average 30-year fixed rate mortgage fell to 3.67% nationwide last week for borrowers willing to pay 0.7 discount points at closing, plus a full set of closing costs. 0.7 discount points is a one-time closing cost equal to 0.7 percent of your loan size, or $700 per $100,000 borrowed.

Today’s mortgage rates are a bargain as compared to just 1 year ago.

In early-June 2011, the average 30-year fixed rate mortgage nationwide was higher by 88 basis points, or 0.88%. If you are among the many U.S. homeowners who bought or refinanced a home around that time, refinancing to today’s mortgage rates could save you 10% or more on your payment.  

Home buyers have measurably more buying power, too.

Here is how mortgage payments on a typical 30-year fixed rate mortgage have changed in 12 months :

  • June 2011 : $509.66 principal + interest per $100,000 borrowed
  • June 2012 : $458.59 principal + interest per $100,000 borrowed

Setting the math to a real-life example, a homeowner whose $350,000, 30-year fixed rate mortgage dates to last June would recognize monthly savings of at least $179 per month just by refinancing into a new 30-year fixed rate mortgage at today’s current levels. That’s more than $2,145 in payment savings per year.

Even after accounting for the required loan discount points and closing costs, the “break-even point” on a refinance like that can come quickly.

Mortgage rates have been dropping but there’s no promise they’ll fall forever. Once rates reverse higher, they’re expected to rise sharply. Therefore, if you’re planning to buy a home or refinance one in Pennsylvania , consider locking in a mortgage rate while mortgage rates are low.

The market looks good for that today.

What’s Ahead For Mortgage Rates This Week : June 11, 2012

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Spain Bailout USD$125 billionMortgage markets worsened last week, halting a multi-week mortgage rate winning streak in Pennsylvania and nationwide. With little economic news on which to trade, investors took their cues from the world’s central banks.

Fed Chairman Ben Bernanke neither dismissed nor promised new market stimulus in the near future, nor did leaders in the Eurozone. China, however, did cut its interest rates for the first time since the start of the global financial crisis.

Conforming mortgage rates edged higher amid a series of volatile trading sessions. Mortgage bonds moved more sharply as compared to prior weeks and analysts expect volatility to continue.

Last week, the biggest story was the ongoing deterioration of confidence within the Eurozone. While Greece continues to struggle under its national debt load, Spain emerged as the area’s newest bailout candidate. Then, on Saturday, the bailout was confirmed.

In seeking up to 100 billion euros ($125 billion), Spain becomes the fourth European Union nation to seek bailout funds since the debt crisis began nearly three years ago. 

The Spain bailout temporarily overshadows investor concern for Greece and the nation-state’s June 17 election.

Sunday, the citizens of Greece will vote to elect a new government, the outcome of which may determine whether Greece remains a member of the European Union. If Greece leaves the EU, it would likely make a negative impact on equities markets, and would benefit U.S. mortgage rates.

This week, mortgage markets will take their cues from the political and economic developments abroad. Initially, investors are looking favorably upon the Spain resolution, and mortgage rates are rising as a result. As the Greek election nears, however, that trend may change.

With little or no data set for release, this week’s mortgage rates are subject to investor sentiment. Expect volatility.

What’s Ahead For Mortgage Rates : Week Of June 4, 2012

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Unemployment RateMortgage markets improved last week in response to ongoing concerns for the European Union and an across-the-board weakening in U.S. economic data — including the much-watched jobs report.

Conforming mortgage rates in Pennsylvania eased lower last week, falling to a new all-time low for 6th week in a row. The moves have been modest, however, falling just 15 basis points during that period.

Back then, Freddie Mac reported the average 30-year fixed rate mortgage to be 3.90% for borrowers willing to pay 0.8 discount points plus a full set a closing costs.

Today, it reports a rate of 3.75% with 0.7 discount points plus closing costs.

The total savings today as compared to April 19 is $8 per month plus $100 in discount points per $100,000 borrowed. This is not a huge monthly discount, but it still lowers a monthly payment. Home affordability remains at its highest point in recorded history.

Mortgage rates may move lower still.

Last week, there was little improvement in the Eurozone with respect to Greece and its future as a member of the European Union. In addition, Spain and Italy saw their respective borrowing costs rise sharply.

Also, Spain is in the process of natiionalizing one of its largest lenders and investors fear the Spain’s government will soon seek financial assistance.

The uncertainty for the future of Europe’s economic union has been driving demand for the relatively-safe U.S. mortgage bond asset class, a pattern known in trading circles as “safe haven” buying. The added demand pushes bond prices up, and bond yields (and mortgage rates) down.

The weaker-than-expected May jobs report also contributed to last week’s falling rates. Job growth is tied to the economy and when job growth is soft, investors are less willing to take risks in the equity markets. Here, again, bond markets benefit and mortgage rates fall.

This week, there is little economic data set for release so expect mortgage markets to take their cues for political and economic news from abroad. With mortgage rates low, though, the timing may be right for a rate lock.

What’s Ahead For Mortgage Rates : Week Of May 29, 2012

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Jobs in focus this weekMortgage markets worsened slightly last week as demand for mortgage-backed bonds slacked. There was little surprise in U.S. economic data and the unfolding story lines of the Eurozone continued unabated.

Mortgage rates in Pennsylvania worsened slightly on the news, climbing for the first time in two weeks.

The change was a small one, however, and rates only eased higher Wednesday through Friday. As such, Freddie Mac’s weekly mortgage rate survey failed to capture the change — Freddie Mac’s survey is conducted Monday and Tuesday. 

According to the Primary Mortgage Market Survey, the average 30-year fixed rate mortgage rate slipped to 3.78% last week, on average, down from 3.79% during the week prior. At the same time, the number of discount points charged by banks increased to 0.8 from 0.7.

Stated differently, 30-year fixed rates mortgage rates dropped but mortgage applicants paid higher fees to get access to them. 1 discount point is equal to $1,000 per $100,000 borrowed.

Freddie Mac also reported no change in the 15-year fixed rate and the 5-year adjustable rate mortgage rates. Average mortgage rates for the twp benchmark products remained at 3.04% and 2.83%, respectively, with no change in discount points.

This week, mortgage rates figure to show a bit more movement. It’s a 4-day week because markets were closed for Memorial Day, and there is a glut of new data set for release. Most notably, the May Non-Farm Payrolls report hits Friday morning.

The jobs report affects mortgage rates because mortgage rates are linked to U.S. economic strength. Wall Street is expecting to see 164,000 net new jobs created in May. If the actual results fall short of that estimate, mortgage rates should fall. If the actual number exceeds estimates, mortgage rates should rise.

Other releases include the Case-Shiller Index, Consumer Confidence, the Pending Home Sales Index, and Personal Income and Outlays. 

30-Year Fixed Rate Mortgage Rates Fall To 3.78% Nationwide

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Freddie Mac mortgage rates

For the fifth consecutive week, conforming 30-year fixed rate mortgage rates have dropped to new all-time lows.

According to this week’s Primary Mortgage Market Survey from Freddie Mac, “prime” mortgage applicants willing to pay 0.8 discount points plus closing costs can secure a mortgage rate of 3.78%, on average.

This is a small improvement in rate over last week when the average 30-year fixed rate mortgage rate was 3.79% with 0.7 discount points.

1 discount point is equal to 1 percent of your loan size.

Like everything in real estate, though, mortgage rates are local. Freddie Mac reports that the mortgage rates available to consumers varied by region.

  • Northeast Region : 3.78% with 0.7 discount points 
  • West Region : 3.74% with 0.9 discount points
  • Southeast Region : 3.79% with 0.7 discount points
  • North Central Region : 3.83% with 0.6 discount points
  • Southwest Region : 3.81% with 0.7 discount points

North Central Region residents currently pay the lowest fees and get the highest rates. For residents of the West, it’s the opposite. Everywhere, however,mortgage rates are down. As compared to one year ago, today’s monthly carrying cost for a conforming, 30-year fixed rate mortgage is lower by $50 per $100,000 mortgaged, or $600 per year.

A $300,000 mortgage would save $1,800 annually.

Mortgage rates have been dropping because Wall Street remains concerned for the futures of Greece, Spain, Italy and the European Union. Several European nations are at-risk for a sovereign debt default and Greece remains a threat to leave the EU. To protect against potential loss, investors have been moving money away from risky holdings toward safer ones — a class that includes U.S. mortgage-backed bonds.

As demand for the bonds rise, prices do, too. This leads mortgage rates lower and so long as economic uncertainty remains, mortgage rates are expected to stay low.

Low mortgage rates make this a good time to buy or refinance a home. Talk to your loan officer to review your mortgage options.

What’s Ahead For Mortgage Rates This Week : May 21, 2012

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Existing Home Sales Mortgage bonds improved last week on lingering concerns for the European Union, plus weaker-than-expected economic data here at home. Global investors were net buyers of mortgage-backed securities last week, pushing mortgage rates lower nationwide.

According to Freddie Mac’s mortgage rate survey, conforming 30-year fixed rate mortgage rates slipped to 3.79%, on average, last week for borrowers willing to pay 0.7 discount points and a full set of closing costs.

This is the lowest on-record.

15-year conforming fixed rate mortgage rates also fell to a new all-time low, registering 3.05% with 0.7 discount points and closing costs.

1 discount point is equal to 1 percent of your loan size.

Unfortunately, not all mortgage applicants in Pennsylvania are getting access to Freddie Mac’s posted rates. This is because the “national mortgage rates” assume a 30-day closing window and few banks have been closing loans in 30 days lately. Persistently low mortgage rates have created an appraiser scarcity which, among other reasons, is forcing banks to stretch the traditional 30-day closing window by fifteen days or more.

Longer rate locks carry higher mortgage rates.

For home buyers in King of Prussia , purchase money loans can often be accommodated in 30 days. For refinancing households, however, the process can take up to 60 days. As a result, refinancing homeowners are finding the 3.79% mortgage rates promised by Freddie Mac’s survey somewhat elusive.

This week, though, as chatter of a European Union dissolution grows, investors are seeking safety of principal. Lately, they’ve been finding it in the U.S. mortgage bond market. As demand for mortgage bonds rises, mortgage rates should fall for both 30-day locks and 60-day ones.

This will aid everyone looking for a home loan.

Other news set for release this week includes April’s Existing Home Sales report and New Home Sales report. Both will be closely watched because housing is tied to U.S. economic recovery. Strong results in either data set may push mortgage rates higher. 

Home Affordability Getting A Springtime Boost From Greece

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Greece affects U.S. mortgage ratesHome affordability is receiving a boost from across the Atlantic Ocean this spring.

For the third time in as many years, a weakening Eurozone is pushing May mortgage rates to new lows throughout Pennsylvania and nationwide.

The story centers in Greece and begins in 2010.

2 years ago, it was uncovered that successive Greece governments had purposefully misreported the nation-state’s economic statistics in order to meet European Union standards. The fraudulent data had permitted Greek governments to spend beyond their means while hiding deficits from EU auditors.

The realization that Greece was heavy in debt with little means to repay its creditors resulted in a massive bailout from the IMF and the rest of the Eurozone nations. The terms for Greece said that, in order to receive its €110 billion aid package, Greece would be required to enact strict spending controls.

This is known as “austerity” and the deal was met with outrage by the Greek public. There’s been general social unrest ever since and, on May 6 of this year, Greece held a special “early election” to elect all 300 members to its legislature.

No party won majority in the elections.

7 different groups garnered seats in the parliament last week with anti-austerity groups faring well. It’s spurred concern that Greece will end its bid for fiscal restraint, and that Greece may choose to leave the 17-nation Eurozone.

The uncertainty surrounding Greece is helping U.S. mortgage rates to make new lows. As concerns mount for the future of Greece — and the Eurozone, in general — global investors seek safer markets for their money.

The U.S. mortgage-backed bond market is one such market.

With the implied backing of the U.S. government, mortgage-backed bonds are viewed as nearly risk-less and investors clamor for safety of principal during uncertain times. The boost in demand drives bond prices up and bond yields down, resulting in lower mortgage rates for home buyers and refinancing households of Phoenixville.

So long as Greece struggles to form its government and flirts with a sovereign debt default, mortgage rates should continue to face downward pressure. U.S. rates may not fall week after week, but analysts expect any rise in rates to be muted.

What’s Ahead For Mortgage Rates This Week : May 14, 2012

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Homebuilder ConfidenceMortgage markets worsened slightly last week as positive U.S. economic news overshadowed growing concerns for the Eurozone’s future. Political and economic issues continue to weigh on Greece and Spain, and it’s still unknown how France’s new President will change that nation’s fiscal direction. 

Conforming mortgage rates in Pennsylvania edged higher on the week overall.

Last week was light on economic data, but the figures released suggest an improving U.S. economy.

For example, the Bureau of Labor Statistics reported 3.7 million job openings nationwide this past March, marking the highest amount since July 2008. Voluntary separations (i.e. “quit jobs”) increased, too — also at levels not seen since 2008.

Voluntary separations may hint at labor market improvement because employees rarely leave a steady-paying job without the prospect of a new job ahead. Furthermore, the four-week moving average of first-time unemployment claims fell for the first time in a month.

The jobs market is one of two key sectors expected to lead the economy forward this year.

The other is housing and, this week, there will be two key housing reports for Wall Street to review. The first is Tuesday’s homebuilder confidence survey from the National Association of Homebuilders. The second is Wednesday’s Housing Starts data for April.

Mortgage rates may also be affected by the Tuesday release of the Retail Sales report and Consumer Price Index report; and, by the Federal Reserve’s Wednesday release of the FOMC Minutes from its last meeting.

For home buyers and mortgage rate shoppers, mortgage rates remain at all-time lows. According to Freddie Mac, the average 30-year fixed rate mortgage rate nationwide is 3.83% for borrowers willing to pay 0.7 discount points and a full set of closing costs — the lowest rate-and-fee combination in Freddie Mac’s recorded history.

However, low mortgage rates may not last much longer — especially if the Eurozone can reverse course on its ailing economies.

Mortgage rates remain volatile and sensitive to changes in market conditions. If today’s mortgage rates fit your budget, consider locking in.

Mortgage Rates Make New All-Time Lows (Again)

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Mortgage rates

Conforming mortgage rates continue to drop.

For the second straight week, the 30-year fixed rate mortgage fell to a new, all-time low nationwide. According to Freddie Mac’s weekly mortgage rate survey, the average 30-year fixed rate mortgage rate dropped 1 basis point to 3.83% this week for borrowers willing to pay 0.7 discount points plus a full set of closing costs.

The 15-year fixed rate mortgage also set a mortgage rate record, registering 3.05% with an accompanying 0.7 discount plus closing costs.

Discount points are a one-time, up-front closing cost, based on loan size. 0.7 discount points is equal to 0.7% of the borrowed amount. A home buyer in Collegeville opening a $200,000 mortgage and paying 0.7 discount points, therefore, would be subject to a one-time $1,400 fee paid at closing.

Borrowers wanting to avoid paying discount points can expect higher mortgage rates than Freddie Mac’s reported national average.

Falling mortgage rates are nothing new throughout Pennsylvania. Since peaking in February 2011, mortgage rates of all types have been in steady decline. The 30-year fixed rate mortgage has shed 122 basis points since that date, falling from 5.05%; the 15-year fixed rate mortgage has shed 124 basis points, falling from 4.29%.

Low mortgage rates give today’s home buyers additional purchasing power, stretching home affordability to new heights.

Low rates also help existing homeowners to lower monthly mortgage payments. For example, as compared to mortgage rates just 15 months ago, homeowners refinancing into today’s 30-year fixed rate mortgage stand to save 13.4 percent on their respective mortgage payments. 

A comparison :

  • February 2011 : $539.88 principal + interest per $100,000 borrowed
  • May 2012 : $467.67 principal + interest per $100,000 borrowed

A homeowner with a $300,000 mortgage at February 2011 30-year fixed rate mortgage rates would save $2,600 annually with a refinance to this week’s low rates. Even accounting for discount points and closing costs, the “break-even point” on savings like that comes relatively quickly.

Mortgage rates can’t be predicted so there’s no guarantee of low rates forever. If today’s rates meet your budget, consider locking something in. Speak with your loan officer about your options.