Mortgage rates down substantially
The Fed’s decision not to taper is making more sense as we review the latest meager economic reports. The economic data from August and September that was released last week, which was delayed thanks to the government shutdown, produced a reaction from market observers of “We waited for this?”
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The September employment report was released three weeks late and fell well below expectations.
Even economic reports from October and November will be influenced by the shutdown. “Some estimates suggest that the shutdown may have carved as much as a half-percentage point off of GDP growth, all told,” said Keith Gumbinger of HSH.com. The next GDP report—which measures economic growth--is expected on November 7.
But despite the government’s shutdown and the weak economy, one thing stands out which can actually help revive the economy: Lower mortgage rates.
Mortgage rates declined
Mortgage rates fell somewhat substantially last week
- 30 year: The overall average rate for a 30-year fixed-rate mortgage (conforming, non-conforming and jumbo) eased by 0.13 percent to 4.32 percent, its lowest value since the third week of June.
- 15-year: The overall average rate for a 15-year fixed-rate mortgage (conforming, non-conforming and jumbo) fell by 0.09 percent from the week prior, slipping to 3.48 percent.
- FHA: The FHA-backed 30-year fixed-rate mortgage cracked the 4 percent mark, falling 0.09 percent to 3.93 percent.
- ARMs: Lastly, the overall 5/1 Hybrid ARM also fell by 0.09 percent, dropping to 3.06 percent for the week ending October 25.
Summer’s higher mortgage rates influenced home sales
Luckily for potential home buyers and refinancers, mortgage rates are again falling after a summer which saw mortgage rates on the rise.
Refinancing activity was crushed just a few months back thanks to higher rates, and we saw some of the same effect, although not to that degree, in home sales. New-home sales showed the most immediate reaction to the rising-summer rates, but for existing sales the impact only appears to be slight.
The larger-than-expected dip in mortgage rates last week might give way to firmer rates this week. However, at the moment, the movement of mortgage rates is once again “data dependent.” Look for mortgage rates to give back a couple of basis points this week.