The Home Buyer's Korner

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April 30th, 2015

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Average Mortgage Rates for April 30th, 2015


Mortgage rates increased slightly this week as yields on government bonds spiked. The yield on the 10-year Treasury which mortgage rates tend to track,  spiked yesterday following a sell-off of both European and German bonds that went worse than expected. That spooked the global markets pushed rates higher, at least for the short term.

Why the disconnect between weak growth and a 2 percent 10-year Treasury yield? It’s because first-quarter GDP figures are backward-looking. Credit markets are looking forward and pricing in accelerating real growth for the second quarter and beyond. Also, weaker-than-expected GDP means a weaker dollar and less of drag from U.S. export trade in the near-term. The bottom line is the Federal Reserve is on hold, oil prices are down and the U.S. Dollar is consolidating. Normally with all the weak economic of late we would of seen a drop in rates, but with expectations of second quarter growth and reasonable health and mood of the U.S. consumer, the foundation is in place for accelerating real growth in the second half of the year and that’s what the 10-year yield is telling us. 

After last week’s mixed housing data, but the state of the home market is positioned to improve as we move in the busy home shopping season.

This week we saw New Home Sales disappointing in March, falling 11.4 percent. The volume of mortgage applications fell 2.3 percent last week from the previous one, according to the National Mortgage Bankers Association. That included a 4 percent decline in refinances and a flat reading on purchase applications.

Those downbeat reports were balanced out by the Case-Shiller Home Price Index, which showed values in 20 cities increased in February 0.9 percent month-over-month on a seasonally adjusted basis and 5 percent year-over-year non-seasonally adjusted basis. Pending home sales for April was up 1.1 percent and the third straight month of increases, according to an April 29 report from the National Association of Realtors.

Indicators for the broader economy were decidedly negative. Consumer confidence for April fell more than expected, as Americans worried over the state of jobs and stagnant wages. That was followed up by a disappointing first assessment of the country’s Gross Domestic Product for the first quarter. The economy nearly ground to a halt during the harsh winter, with only a 0.2 percent gain, due to a slowdown in consumer spending and a contraction in business spending.

At the recent FOMC meeting, policymaker acknowledged the economy’s pullback in the first quarter in its statement following its two-day meeting. It blamed it on “transitory factors” and expected “economic activity to expand at a moderate pace,” with appropriate accommodative policy. The committee kept the federal funds rate, a key benchmark for interest rates on business and consumer loans, near zero, as expected.

Given the recent weak economic data, I think rates will start to trend lower rather than higher, so keep in close contact with your mortgage lenders if you haven’t locked in a rate.

  1. The benchmark 30-year fixed-rate mortgage rose to 3.68 percent from 3.65 percent last week, according to the Freddie Mac Mortgage Rate Survey. One year ago, that rate was 4.29 percent. The 30-year mortgage rate in this week’s survey had an average total of 0.60 discount and fees. 
  2. The benchmark 15-year fixed-rate mortgage rose to 2.92 percent from 2.94 percent.
  3. The benchmark 1-year adjustable-rate mortgage rose to 2.49 percent from 2.44 percent. 
  4. The benchmark 5/1 adjustable-rate mortgage rose to 2.85 percent from 2.84 percent.

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