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Record low mortgage rates in 2013

What’s one tangible benefit produced from a weak economy? Low mortgage rates.  

Record mortgage rates

According to the latest data from HSH.com, the overall average rate for 30-year fixed-rate mortgages (conforming, non-conforming and jumbo) eased by a single basis point (0.03 percent) to 3.65 percent for the week ending April 26, a new low for 2013.

The overall average rate for 15-year fixed-rate mortgages (conforming, non-conforming and jumbo) dropped by four basis points (0.04 percent) to 2.89 percent for the week, a new all-time low.

FHA-backed 30-year fixed-rate mortgages followed along with a decline of just one basis points (0.01 percent), falling to an average rate of 3.28 percent, accompanied by a one-hundredth percentage point slip in the overall average rate for 5/1 Hybrid ARMs to an average 2.60 percent for the week. a new low water-mark for the most popular ARM.

Mortgage rates affect home sales

While there is no doubt that the refinance market is sensitive to any bump in interest rates, it should be noted that home sales seem to be, too. A late-winter rise in mortgage rates certainly wasn’t enough to cause a complete stall in sales or refinances, but it was enough to slow the speed of the recovery in home buying.

Sales of existing homes leveled off in March, declining by 0.6 percent. In fact, after a string of more or less regular gains, sales have been holding at roughly this level for the past five months. Although available inventory on the market did expand slightly to 4.7 months of supply, this is still a number well below the six months of supply which is considered normal.

While a lack of supply seemed to be hurting sales growth, tight inventories are fostering higher home prices. The 11.8 percent gain in prices when compared against March 2012 continued a string of double (or near double) digit gains in each of the last six months.

Sales of new homes did manage a slight rise in March, posting a 1.5 percent increase over the February figure. As with existing homes, inventory levels remain tight.

Low mortgage rates expected this week

The peak and valley for mortgage rates may not be completely over, but the recent downturn in mortgage rates should help foster some additional home buying and refinancing activity, and that alone should be enough to keep rates from falling very much.

From here, we would need some truly bleak reports--both domestic and foreign--to press rates much lower, or a collapse in demand for mortgage credit. More likely, we are back to a place where, for the most part, the only way to go is up.

Not this week, though, or at least not much, anyway. Mortgage rates are likely to hang around these levels, possibly adding a couple of basis points at most.

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