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Last updated on February 2nd, 2021 at 05:52 pm
Mortgage rates paused for the Thanksgiving holiday, after sinking to another all-time low last week. This was the 13th record low this year.
On Thursday, the latest data was released by Freddie Mac, and according to it, the 30-year fixed-rate average held steady at 2.72% with an average of 0.7 points. It was unchanged from a week ago and 3.68 % a year ago.
To come up with weekly national average mortgage rates, Freddie Mac, the federally chartered mortgage investor, aggregates rates from about 80 lenders across the country.
It uses rates for high-quality borrowers who tend to have strong credit scores and large down payments. These rates are not available to every borrower.
The 15-year fixed-rate average also didn’t move, leveling off at 2.28% with an average of 0.6 points. It was 3.15 % a year ago.
The five-year adjustable-rate average spiked to 3.16% with an average of 0.3 points. It was 3.43 % a year ago and 2.85% a week ago.
Sam Khater, Freddie Mac’s chief economist, said in a statement, “Mortgage rates remain at record lows and while that has fueled a refinance boom, it’s been driven mainly by higher-income borrowers.
With about 20 million borrowers eligible to refinance, lower- and middle-income borrowers are leaving money on the table by not taking advantage of low rates.
On the home buying side, demand continues to surge, and it has created a seller’s market where inventory is at a record low and home prices are rising, beginning to offset the benefits of the low rates.”
According to the mortgage data and technology company, Black Knight’s report found that more than 19 million borrowers are what they describe as high-quality refinance candidates.
These borrowers hold 30-year mortgages, have more than 20 % equity in their homes, credit scores above 720, and are current on their payments.
By refinancing at today’s rates, they could benefit by shaving off at least 75 basis points on their current rate.
(A basis point is 0.01 percentage point.) That translates into a savings of $400 a month for 4.5 million borrowers and $500 a month for 2.7 borrowers.
It is bad for mortgage rates when the stock market hits a new high as it did this week. Money shifts away from long-term bonds and into equities, causing bond prices to fall and rates to rise.
But Tuesday’s record-high for the Dow came too late in the week to be factored into Freddie Mac’s survey.
However, the end of record-low rates may happen soon if investors’ optimism continues.
That said most experts don’t expect rates to move higher anytime soon.
Bankrate.com, which puts out a weekly mortgage rate trend index, found nearly two-thirds of the experts it surveyed predict rates will hold steady in the coming week.
Gordon Miller, owner of Miller Lending Group in Cary, N.C said, “I would expect rates to stay the same.”
According to the latest data from the Mortgage Bankers Association, the market composite index — a measure of total loan application volume — mortgages applications aren’t slowing down it had increased 3.9% last week.
The purchase index rose 4% from the previous week and was 19% higher than a year ago. The refinance index went up 5% and was 79% higher than a year ago. The refinance share of mortgage activity accounted for 71.1% of applications.
Joel Kan, an MBA economist, said in a statement, “The decline in rates ignited borrower interest, with applications for both home purchases and refinancing increasing on a weekly and annual basis.
The ongoing refinance wave has continued into November.
Both the refinance index and the share of refinancing applications were at their highest levels since April, as another week of lower rates drew more conventional loan borrowers into the market.
Amidst strong competition for a limited supply of homes for sale, as well as rapidly increasing home prices, purchase applications increased for both conventional and government borrowers.
Furthermore, purchase activity has surpassed year-ago levels for over six months.”
Reference Source: The Washington Post
