As Congress and President Obama finally settled on a debt deal over the past week, mortgage rates plunged, hitting historical lows in some instances.
The 30-year fixed rate, usually the most popular choice for homebuyers, fell to 4.45% from 4.57% last week, its lowest point since November of last year, according to the Mortgage Bankers Association. Meanwhile, the rate on the less popular 15-year fixed rate plunged to a new record low of 3.52%, down from 3.67% a week earlier. (money.cnn.com)
The up-front points lenders charged dropped as well, to 0.78 from 1.14 for 20%-down loans, according to the industry group. A homebuyer financing a $200,000 mortgage could save $14 a month and pay $720 less at closing based on the current points.
The rock-bottom interest rates drove up total mortgage applications, both for purchases and refinancing, by about 7%, compared with a week earlier, said Michael Fratantoni, the Mortgage Bankers Association’s vice president of research and economics. While the increase may seem substantial, he noted that applications are still well below last year’s level.
Refinance application volume increased, but even though 30-year mortgage rates are back below 4.5 percent, the refinance index is still almost 30 percent below last year’s level. Factors such as negative equity and a weak job market continue to constrain borrowers. Michael Fratantoni
Mortgage rates are following bond yields lower, explained Greg McBride, Bankrate’s chief economist. The yield on 10-year Treasury notes hit 2.6% on Wednesday down from 3.03% the last week of July.
The plunge in Treasury yields is because we’ve been hit with a string of poor economic readings. Those include a weak GDP report and slowdowns in manufacturing, consumer spending and hiring. Greg McBride
With rates so low and home prices down more than 30% from peak, there has probably never been a more affordable time to buy a home. However, the housing market is still in a slump as very few people are granted loans due to more tight regulations by lenders.
