Silver Lining of Fiscal Cliff Uncertainty Means New Low for Mortgage Rates

While mortgage rates have remained low in recent years, mortgage application volume rose last week as rates hit a new low, resulting from uncertainty over the fiscal cliff, according to the MBA.

Mortgage rates hit new low, application volume rises

According to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending December 7, 2012, mortgage application volume increased 6.2 percent from the previous week, with an 8.0 percent increase in refinance applications and a 1.0 percent increase in new mortgage applications.

“Continued uncertainty due to the lack of resolution regarding the fiscal cliff led interest rates lower last week, with mortgage rates reaching a new low in our survey,” said Mike Fratantoni, MBA’s Vice President of Research and Economics.

“Refinance activity increased,” Fratantoni said in a statement, “with the refinance index hitting its highest level in two months, and the refinance share reaching its highest level since January 2009. Applications for purchase increased for a fifth consecutive week, and are running almost ten percent above their level at this time last year.”

The refinance share of mortgage activity increased to 84 percent of total applications from 82.0 percent the previous week, while the adjustable-rate mortgage (ARM) share of activity remained at 3.0 percent of total applications. The HARP share of refinance applications increased to 29.0 percent from 27.0 percent the prior week.

Current mortgage rates

According to the MBA:

  • The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 3.47 percent, the lowest rate in the history of the survey, from 3.52 percent, with points decreasing to 0.36 from 0.41 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.
  • The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) decreased to 3.77 percent from 3.79 percent, with points increasing to 0.35 from 0.32 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
  • The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.32 percent, the lowest rate in the history of the survey, from 3.34 percent, with points decreasing to 0.51 from 0.62 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
  • The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.85 percent, the lowest rate in the history of the survey, from 2.86 percent, with points decreasing to 0.26 from 0.27 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
  • The average contract interest rate for 5/1 ARMs increased to 2.63 percent from 2.62 percent, with points decreasing to 0.34 from 0.40 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

http://agbeat.com/real-estate-mortgage-economy/mortgage/silver-lining-of-fiscal-cliff-uncertainty-mortgage-rates-hit-new-low/

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Realtor with Greg Garrett Realty, actively licensed in the state of Virginia

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