Freddie Mac confirms: 30-year rate below 5% again

A Freddie Mac survey out today shows the average fixed rate for a traditional 30-year home loan was back below 5% this week.

It was the second industry survey in two days to show the rate below the threshold, which has become a psychological trigger for homeowners refinancing mortgages. A Mortgage Bankers Assn. report Wednesday said refis had jumped as the 5% barrier was crashed.

Freddie Mac’s survey, conducted Monday through Wednesday, showed borrowers with good credit and a 20% equity stake in their home were getting 30-year loans for $417,000 or less at an average fixed rate of 4.98%.

The borrowers were paying an average of 0.7% of the loan amount in upfront fees and points to the lender, the usual cost reflected in the Freddie Mac survey.

In the Western region of the country, which includes California, borrowers were buying down the average rate to 4.91% by paying 0.9 in upfront points to lenders, Freddie Mac said.

The rate was down a bit from last week, when it averaged 5.03%, and a lot from last year at this time, when the 30-year fixed-rate mortgage averaged 6.20%.

Fixed rates on 15-year traditional mortgages averaged 4.40%, Freddie Mac said, down from 4.46% last week and 5.88% a year ago. Borrowers were paying 0.6% in upfront costs for those loans.

-- E. Scott Reckard

Crashing the 5% barrier again

Interest rates for traditional home loans crashed the 5% barrier again last week, according to a report from a trade group released today.

And, just like that, demand for mortgages jumped back up, as more homeowners lined up to refinance their loans into a number starting with a "4," the survey by the Mortgage Brokers Assn. found.

The increase was from refinancings, not home buying, the trade group says in its survey. Applications for home loans increased by 8.2% overall from the previous week, but purchase applications fell 1.8% while refi applications surged 14.5%. 

The MBA says the contract rate for 30-year fixed-rate mortgages fell to 4.97% from 5.04% during the week that ended Friday.

Upfront points to lenders, including the origination fee, decreased to 1.01% from 1.25% of the loan amount. The survey assumed that borrowers had good credit and that the loans were for 80% or less of the home's appraised value.

The slight week-to-week drop in mortgage rates has a negligible effect on the cost.  Someone with a $417,000 mortgage -- the limit before you get into "jumbo"-loan territory and rates go higher -- would pay $2,230.91 a month for a 30-year fixed loan at 4.97%, versus $2,248.75 a month at 5.04%.

But when rates go back up again sometime in the future, who wants to brag: "Hey, remember back in 2009 when you could get a loan for less than 5%? I locked mine in at 5.04%!"

-- E. Scott Reckard

 

Mortgage rates creeping up, Freddie Mac survey shows

Fixed interest rates on home loans crept back up a bit in the week ending today, according to the latest survey by Freddie Mac.

The giant, government-controlled mortgage company said fixed rates for a 30-year loan averaged 4.92% with an additional 0.7% of the mortgage amount paid in upfront fees and points. That was up from 4.87%, also with 0.7% in upfront costs, a week earlier and down from 6.46% a year ago.

The average rate for a 15-year fixed-rate mortgage, a popular option for people refinancing to pay their loans off faster, was 4.37% this week with similar fees and points, Freddie Mac said. That was up from 4.33% a week earlier and down from 6.14% a year ago.

Despite the uptick, it was the third straight week in which typical 30-year rates as determined by the Freddie Mac survey were below 5%.

A separate survey by the Mortgage Bankers Assn. this week found that the typical rate had edged back up to 5.02%. The group expects the interest rate to rise to 5.6% by the end of next year.

Mortgage professionals say the surveys are useful as indicators of price trends. However, not everyone  should expect to obtain home loans at the rates in the surveys, which assume solid credit and 20% down payments.

-- E. Scott Reckard

Average 30-year fixed rate edges back above 5%; applications fall

The average rate on a 30-year fixed home loan edged back above 5% last week -- and down went mortgage applications.

That's the word in a Mortgage Bankers Assn. survey released today, which said applications for purchase loans slipped 5% from the previous week. Applications for refinance loans, which have made up about two-thirds of the total recently, were essentially flat, falling by 0.1%. Overall decline: 1.8%

The trade group's statistics assume a 20% down payment -- a lofty amount for many people.

But for borrowers who could hurdle that barrier, the average 30-year fixed rate increased during the week from 4.89% to 5.02%, with upfront points paid to lenders (including the origination fee) decreasing from 1.13% of the loan balance to 1.11%, the trade association said.

The average 15-year rate rose from a record low of 4.32% to 4.44% with points unchanged at 1.04% of the loan amount.

Rates for the 30-year slipped below 5% in the middle of last month, the Mortgage Bankers Assn. said, triggering a mini-boom in applications. The trade group said this week that it expects rates to average 5% this quarter but climb back to 5.6% sometime late next year.

Some mortgage pros say 30-year rates beginning with a "4" are a magic trigger for borrowers. What do you think?

--E. Scott Reckard

Mortgage applications up again as average 30-year rates stay below 5%

The ups and downs of the mortgage business continue -- these days, with some benefit for consumers.

 

The Mortgage Bankers Assn. reported today that applications for home loans increased 16.4% last week, with refinance and purchase loans up by double digits.

The survey showed the average interest rate for 30-year fixed-rate mortgages remained below 5% for the third straight week, dipping to 4.89% from 4.94% a week earlier. (The rate assumes borrowers had good credit and made 20% or higher down payments.)

 

It looked as though borrowers were trying to maximize the benefit by paying more upfront lender fees, or points, to lower the rates.  The bankers groups said the typical points paid rose from 0.94 to 1.13 (a point is 1% of the loan).

 

The 30-year rate was at its lowest level since May, when it was 4.81%. And the rate on 15-year loans continued to fall to all-time lows, dropping from 4.34% with 1.01 points to 4.32% with 1.04 points.

You can read the industry group survey here.

-- E. Scott Reckard

Applications for refinancing down, purchases up as interest rates rise

Applications for home loans declined by more than 16% last week as interest rates rose, the Mortgage Bankers Assn. said in a survey today.

As expected, the drop-off occurred in people seeking to refinance their homes because the benefits of refis are driven by interest rate trends.

The trade group said the average rate for 30-year, fixed-rate mortgages jumped from 4.81% a week earlier to 5.25% -- the biggest weekly increase since October 2008. Typical points charged, including the origination fee, decreased from 1.28% to 1.02% of the loan amount for mortgages amounting to 80% or less of the property value.

The average rate for 15-year, fixed-rate mortgages increased to 4.8% from 4.44%.

Interestingly, applications to purchase homes rose more than 4%, the mortgage bankers said. If you think now is the time to buy, a rate in the low 5% range still looks pretty good.

-- E. Scott Reckard
 

Broad says mortgage rates need to drop further

Eli Broad, founder of KB Home, said the areas hardest hit by the housing crisis won't rebound until mortgage rates there drop to 3%, Bloomberg News reported.

Broad, speaking in an interview at the Milken Institute Global Conference in Beverly Hills, also said the housing industry will see more mergers and acquisitions as the national housing slump continues.

-- Nathan Olivarez-Giles

Home builders try to entice buyers with low interest rates

Some home builders are cutting interest rates as a further incentive to home buyers. From the Wall Street Journal:

As mortgage rates fall to near historic lows, some home builders are offering even lower interest rates, in an effort to lure buyers amid the slow spring selling season.

The latest sales promotion: Lennar Corp. is offering a fixed 3.625% rate over the life of a 30-year fixed rate mortgage. The deal is besting average rates that have fallen below 5% nationwide, but it comes as other builders are reporting mixed results from similar incentives.

Hovnanian Enterprises Inc.'s recent offer of a 3.99% rate sparked "underwhelming" interest from home buyers, says Dan Klinger, president of the builder's mortgage operation. "It wasn't like we needed crowd control," says Mr. Klinger.

How low they can go to lure buyers is regulated however.

Federal regulations limit how much the builders can contribute to buy down mortgage rates. Currently, if a home buyer puts down 5% or less, the builder is limited to incentives worth 3% of the sales price, says Mr. Klinger. For downpayments of 10%, the limit climbs to 6%.

Meanwhile, by comparison, the Mortgage Bankers Assn. released its Weekly Mortgage Applications Survey today. From the news release:

The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.61 percent from 4.63 percent, with points decreasing to 1.03 from 1.13 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The contract rate is a new record low for the survey, which began in 1990. 

Takes some of the shine off those builders' rates.

-- Lauren Beale

Thoughts? Comments?

Lower mortgage rates ahead?

If you've been waiting for home loan interest rates to drop, it's time to start paying attention again. From "Mortgage rates expected to slide with Fed's new moves" by Tom Petruno at The Times' Money & Co. blog:

Home loan rates should fall further with the Federal Reserve's latest moves to pull down long-term interest rates -- offering new hope to home buyers and to homeowners looking to refinance.

But how much lower loan rates might drop is a matter of debate on Wall Street. Although the Fed directly controls short-term interest rates, it merely influences long-term rates.

Some experts see mortgage rates tumbling another half-percentage-point in the next few weeks. Others see a smaller decline.

Read the entire post for the details, but in a nutshell we could be looking at rates under 4.5%, which would no doubt spur another refi wave.

-- Lauren Beale

Thoughts? Comments?

"Hasn't housing been subsidized enough?"

To answer commenter Marie's question, "Really, hasn't housing been subsidized enough in this country?" in the L.A. Land thread for "First-time buyers get $8,000 tax credit in stimulus bill," check out "Obama eyes home loan subsidies in rescue plan: sources" from Reuters:

The Obama administration is hammering out a program to subsidize mortgages in a new front to fight the credit crisis, sources familiar with the plan told Reuters on Thursday, boosting financial markets.

In a major break from existing aid programs, the plan under consideration would seek to help homeowners before they fall into arrears on their loans. Current programs only assist borrowers that are already delinquent.

The sources were unidentified, and the details were scant:

Under the evolving plan, sources said homes would undergo a standardized reappraisal and homeowners would face a uniform eligibility test....

The Treasury Department, which is taking the lead role in financial rescue efforts, did not respond to a request for comment....

[U.S. Treasury Secretary Timothy] Geithner said on Thursday the administration would soon put a housing program in place that uses "a mix of incentive and persuasion" to get mortgage companies to rewrite loans.

"The key elements of the strategy are going to bring mortgage interest rates down to help avoid the foreclosures that we can reasonably expect to avoid," he said....

Officials weighed, but have shelved for now, another plan that would have the government stand behind low-cost mortgages of between 4.0 percent and 4.5 percent, the sources said.

So there's one answer, Marie: Apparently not everyone thinks so. Thanks for asking.

--Lauren Beale

Thoughts? Comments?

Photo: Timothy Geithner. Credit: Jay Mallin / Bloomberg News