Mortgage rates still down as construction increases

Mortgage rates still down as construction increases

The Federal Savings Bank

October, 2012

According to the recently released results of the Primary Mortgage Market Survey, fixed rate mortgage rate averages were slightly lower for the week ending October 18, with a 30-year fixed rate mortgage averaging 3.37 percent.
The 30-year fixed-rate mortgage was just above its all-time record low of 3.36 percent while the 15-year decreased to an all-time record low of 2.66 percent.
"Mortgage rates remained more or less unchanged this week as home construction builds up steam," said Frank Nothaft, vice president and chief economist of Freddie Mac. "Construction on single-family homes jumped to an annualized rate of 11 percent in August, the strongest pace since August 2008. Over the first nine months of the year, single-family starts were 23 percent higher than the same period last year."
The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 2.75 percent in the week ending October 18. The index grew an average 0.6 points, increasing from the 2.73 percent that is averaged last year.
Nothaft added that home builder confidence increased for the sixth consecutive month in October, jumping to the highest level since June 2006, according to the NAHB/Wells Fargo Housing Market Index.
Fox Business recently released figures showing that the economy is slowly recovering and more Americans are now able to afford homes that they once weren't able to as a result of more relaxed lending standards. The emergence of the economy is now sparking more interest in short sales, which is when a mortgage holder asks for permission from the bank to sell the home for less than owed on the mortgage.
According to RealtyTrac, in the second quarter of last year, short sales made up 12 percent of nationwide homes sales. Bank of America reported that it expects to process more than 100,000 short sales this year.
Fox reported that California has one of the highest rates of short sales in the nation and more than a quarter of all homes that were sold in the state in spring 2011 were through this process, which could be of interest to first-time home buyers.
The applications for refinancing homes that were processed by the FHFA during August totaled 99,000, which is nearly one-sixth of all HARP mortgage refinancings completed since the beginning of the year.

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