Fixed Rates Align with Improving GDP Reports
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UPDATED: Nov 7, 2013
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Fixed home loan interest rates increased while adjustable rates declined this week according to rate reports provided by loans.org.
For the week ending Nov. 7, 2013, the 30-year fixed-rate mortgage averaged 4.06 percent, an eight basis point increase from 3.98 percent set last week.
The 15-year FRM shifted upwards this week from 3.03 percent to 3.08 percent.
Adjustable rates acted in an opposing manner. The 5/1 adjustable-rate mortgage dropped from 2.71 percent to 2.69 percent this week.
Despite the lower interest costs offered through adjustable rates mortgages, most consumers do not think of them as viable options, according to Michael Rosenbaum, mortgage loan originator for First California Mortgage Company.
“The vast majority of loans remain fixed rate products,” he said.
Large interest rate spikes for adjustable rate mortgages, such as the 3.39 percent seen on Aug. 1, 2013, diminished most consumer incentive to take on the risk of an ARM.
“People are generally more interested in fixed rate security,” he said. “The vast majority of people would rather protect their backside.”
Home loan Interest rates are not the only improving sector of the housing industry. Reports released today found that the economy is improving more than initially predicted. According to the U.S. Department of Commerce, real gross domestic product increased at an annual rate of 2.8 percent during the third fiscal quarter. Analysts only predicted a 2 percent increase.
The housing recovery is acting similar to the economic improvement according to Keith Newcomb, portfolio manager for Full Life Financial.
“The real economy continues to strengthen and the housing market is following the same path,” he said.