In Homes.com’s last mortgage report, things weren’t looking too hot for homeowners as mortgage rates were moving closer to an annual high. This time around, we bring with us some good news! According to Freddie Mac’s latest survey, average fixed mortgage rates are the lowest we’ve seen since June 2013!
Mortgage backed securities (MBS) have jumped 150+ basis points over the past two weeks, which has resulted in lower mortgage rates. Most of this increase can be attributed to a weaker than expected employment report, in which there were 45,000 fewer jobs created than economists predicted. To clarify this situation a bit, bad economic news means good news for mortgage rates.
Through recent years the Fed has consistently kept mortgage rates low because they were purchasing a considerable amount of bonds and mortgage backed securities. This explains the jump in mortgage rates over the summer, in which the market assumed that the Fed was going to reduce its number of bond purchases. Due to the recent decline in employment opportunities, you can expect that the Fed will continue with its bond purchases in the upcoming months.
Here are some highlights of the most recent Freddie Mac Primary Mortgage Survey:
- 5-year adjustable-rate mortgage (ARM) averaged 3.00 percent with an average 0.4 point, down from last week when it averaged 3.07 percent.
- 15-year FRM averaged 3.24 percent with an average 0.6 point, down from last week when it averaged 3.33 percent.
- 30-year fixed-rate mortgage (FRM) averaged 4.13 percent with an average 0.8 point for the week ending October 24, 2013, down from last week when it averaged 4.28 percent
Mortgage Rates Outlook
Rates are expected to remain low through the remainder of the year, but it is likely we will see higher rates in the first few months of 2014 because of the Fed reducing its bond purchases. Refinancing would be a good move for your clients in the next 2-3 months, as rates are expected to remain low. This is particularly true for those clients that closed on their loans during the summer months when rates were unusually high. If your clients received at least a 0.25% better rate than the original and had little to no closing costs, they would be able to keep some much need dollars in their pocket.
Are any of your clients looking to refinance due to the lower mortgage rates? Share any trends that you’ve recognized in your local market on Facebook and to find more mortgage related news like this, check out all the reports from Homes.com featured author Shashank Shekhar.