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December 5th, 2012

Mortgage rates hit new low as ‘cliff’ approaches



Capitol Building 2Rates on the most popular types of mortgages eased, with 30-year fixed rates moving to new record lows, according to HSH.com’s Weekly Mortgage Rates Radar. The average rate for conforming 30-year fixed-rate mortgages fell by six basis points (0.06 percent) to 3.45 percent. Conforming 5/1 Hybrid ARM rates decreased by seven basis points, closing the Wednesday-to-Tuesday wraparound weekly survey at an average of 2.67 percent.

“The fiscal cliff creeps even closer, and there is still no deal in sight,” said Keith Gumbinger, vice president of HSH.com. “Add to that somewhat less encouraging economic news and mortgage rates have found some space to fall of late.”

Even if a fiscal deal comes, the combination of federal spending cuts and tax increases seems likely to trim economic growth, at least for a while.

“Lost in the conversation about the damage falling off the ‘cliff’ would cause is a discussion about how much damage any agreement may cause,” notes Gumbinger. “We are going to get one or another in just a few weeks’ time, and economic growth could be trimmed as a result. Fortunately, slower growth is good for mortgage rates, so favorable financing opportunities should persist.”

Real estate’s own fiscal cliff

While a fiscal cliff threatens the economy as a whole, real estate has its own fiscal cliff that’s quickly approaching. And unless certain rules, laws and programs are extended, we could see a huge falloff in the recovery of the housing market.

Potential borrowers might want to get their transactions completed in front of those changes, since they might push rates and fees higher in their respective wakes.

Here are five items with approaching expirations that could seriously threaten the strides we’ve made so far:

  1. Expiration of the mortgage interest deduction
  2. Expiration of the Mortgage Debt Forgiveness Act
  3. Tax-deductible mortgage insurance
  4. Expiration of Operation Twist
  5. Foreclosure reviews

Be sure to read “Real estate’s fiscal cliff: 5 items to watch out for” in its entirety.

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About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

Our bloggers:

Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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