Mortgage interest rates more or less stuck in neutral; pending home sales down for month, up for year

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The sideways momentum of bank mortgage rates was confirmed on this week's Freddie Mac Primary Mortgage Market Survey.

Average rates for fixed-rate loans barely budged on the survey for the week ending Oct. 27. The average rate for a 30-year fixed-rate mortgage fell only 1 basis point to 4.1% with an average 0.8 discount point, and the average 15-year fixed loan rate held steady at 3.38% with 0.7 point. Adjustable-rate mortgage rates were more volatile and moved in opposite directions: the average 5-year ARM rate rose 7 points to 3.08% with 0.5 point, but the average 1-year ARM rate fell 4 points to 2.9% with 0.6 point.

Other indicators affecting the housing market were similarly mixed, according to Freddie Mac Vice President and Chief Economist Frank Nothaft. "The latest monthly housing market indicators were mixed, with consumer confidence soft, house prices largely flat, and new home sales up from very low levels," he said. "Consumer confidence fell below the market consensus forecast in October to the lowest reading since March 2009, according to The Conference Board. The FHFA Purchase-Only House Price Index for the U.S. declined 0.1 percent in August on a seasonally adjusted basis, while the S&P/Case-Shiller® 20-city Composite home price index rose 0.2 percent (not seasonally adjusted) between July and August, with one-half of the cities registering a dip in values. Finally, new home sales increased 5.7 percent in September to the strongest pace since April."

The news on the sales contract front was both bad and good, depending on the perspective. The National Association of Realtors' Pending Home Sales Index, a leading indicator based on sales contract signings, stood at 84.5 in September, down 4.6% from August but up 6.4% from this time one year ago. NAR Chief Economist Lawrence Yun implicitly endorsed Congressional efforts to reinstate expired higher conforming loan limits when he said, “America’s monetary policy is contradictory and confusing, where some consumers with the best financial capacity and top-notch credit scores pay higher mortgage interest rates. The Federal Reserve evidently has been attempting to lower mortgage rates, yet more consumers are faced with taking out jumbo loans that carry higher interest rates.”

Mortgage rates rise on Zillow, hold steady on Bankrate

While the markets figure out how to parse the euro bailout deal, mortgage rates continue to fluctuate on the overnight surveys with no clear direction.

Yesterday's average afternoon mortgage rates on the National Mortgage Marketplace, with changes from Wednesday and one week ago, are: 30-year fixed, 4% (+5 points, +5 points); 15-year fixed, 3.38% (+3 points, +8 points); 5-year ARM, 2.9% (+8 point, +10 points). Today's real-time rates as of 9 a.m., with changes from yesterday morning and afternoon, are: 30-year fixed, 4.1% (+15 points, +10 points); 15-year fixed, 3.4% (+9 points, +2 points); 5-year ARM, 2.85% (+9 points, -5 points).

This morning's average mortgage rates on the overnight survey, with changes from yesterday and one week ago, are: 30-year fixed, 4.17% (+1 point, -unchanged); 15-year fixed, 3.45% (unchanged, unchanged); 5-year ARM, 2.98% (-2 points, -5 points).

One basis point equals one hundredth of a percentage point. Rates reported in this article assume good credit (FICO score of 650 or higher) and a 20% down payment. Morning rates from are for loans for the most creditworthy borrowers (FICO score of 720 or higher). One discount point equals one percent of the total value of the mortgage, paid as interest up front.

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