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Poor economy means lower mortgage rates

The mediocre economy continues to put downward pressure on mortgages rates, sliding to a place near their lowest levels of 2013.

According to HSH.com, the overall average rate for 30-year fixed-rate mortgages fell from a 3.88 percent high in March to 3.68 percent presently--just one basis point above the lowest rate in 2013.

The difference in mortgage rates from recent peaks to valleys may be more psychological than fiscal, though, since the difference in payment between 2013 highs and this week’s average is just $11.37 per month for a $100,000 30-year fixed rate mortgage.

Mortgage rates near yearly low

The overall average rate for 30-year fixed-rate mortgages (conforming, non-conforming and jumbos) eased by a single basis point (0.01 percent) to 3.68 percent, its second lowest rate of 2013.

The overall average rate for 15-year fixed-rate mortgages (conforming, non-conforming and jumbos) also dropped by one basis point (0.01 percent) to 2.93 percent for the week ending April 19.

FHA-backed 30-year fixed-rate mortgages followed along with their own decline of just one basis points (0.01 percent), falling to an average rate of 3.29 percent, while the overall average rate for 5/1 Hybrid ARMs failed to move at all, holding an average 2.61 percent for the week.

Housing markets helped by low mortgage rates

Housing markets are no doubt helped by persistently low mortgage rates. However, it would be a mistake to think that improvement will come in a straight-upward line, what with high levels of unemployment and caution about prospects for economic improvement just ahead. Although housing starts bounced 7 percent higher for March, all of the gain was concentrated in the multifamily portion of the market.

A slow growth period: Here and abroad

Overall, it seems to us that the economy is neither growing much nor declining much, but rather treading water at a moderate pace. Including China’s rate of growth sliding below 8 percent, we are in a slow growth period here and abroad.

Interest rates will have a tough time getting any upward traction in such a climate, although we could have flares higher from time to time, as we did earlier this year. It may be a long slog, too, with at least one Federal Reserve official predicting perhaps five to 10 years of financial instability ahead, with the Fed continuing unusually low interest rates as policy.

Mortgage rates seem content to wander at about these levels, with an equal chance of rising or falling a couple of basis points.

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