Mortgage Rates Break Pattern and Decrease
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UPDATED: Feb 28, 2013
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After remaining mostly unchanged for a month, the average mortgage loan interest rates decreased this week according to Freddie Mac survey results.
For the week ending Feb. 28, 2013, the 30-year fixed rate for mortgages averaged 3.51 percent with a 0.8 point average, down from last week’s 3.56 percent average. In addition, the 15-year FRM averaged 2.76 percent with a 0.8 point average, down from last week when it averaged 2.77 percent.
Len Kiefer, Freddie Mac’s deputy chief economist, told loans.org that mortgage loan interest rates remain very low by historical standards.
“With the Federal Reserve committed to keeping short term rates low for the next couple of years, at least until unemployment is down to around six percent, we should not expect to see long term rates, including mortgage rates, increase very much,” he said. “Our current outlook has mortgage rates below four percent throughout 2013.”
Kiefer said the low rates will continue to support the housing recovery.
The Freddie Mac survey also found the 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.61 percent with a 0.6 point. This is down from last week’s 2.64 percent average. In addition, the 1-year Treasury-indexed ARM averaged 2.64 percent with an average 0.4 point average, down from 2.65 percent last week.
Frank Nothaft, vice president and chief economist for Freddie Mac said the mortgage rates eased as the consumer price index in February remained steady.
The S&P/Case-Shiller national home price index increased 7.3 percent in 2012, the largest four-quarter growth since Q3 2006.
“This, in part, was a driving force that pushed up the number of existing and new home sales in February to the highest levels since July 2007 and July 2008, respectively,” Nothaft said in a release.
Even though the rates are on a fluctuating but increasing upturn, and no longer at historic lows, Kiefer said this alone will not inhibit buyers from purchasing a new home.
“For many would-be homebuyers in today’s marketplace the limiting factor is not affordability, but rather the lack of a job and stable income, insufficient funds for a down payment, or adequate credit given today’s lending standards,” he said.
Kiefer continued stating that a larger impact will be labor markets. He said if the labor markets continue to recover, there will be an increased demand for home purchases.
“These factors are likely to outweigh any affect modest interest rate increases will have on housing markets,” he said.
And for 2013, housing prices are expected to continue to grow, strengthening the market.
Kiefer said in the most recent quarter shows that nearly 75 percent of metro areas show average housing prices up over the year. This is the first occurrence of positive price appreciation since 2006.
“The increase in prices is great news for homeowners, who have seen the value of their homes drop for several years,” he said.