Mortgage rates stay low, buyers not biting
Purchase loan demand near 15-year lowBy Inman News, Friday, October 21, 2011.
Mortgage rates are hovering not far above record lows set during the first week in October, but demand for purchase loans hit a low last week not seen since 1996, surveys of lenders show.
Freddie Mac's latest Primary Mortgage Market Survey showed rates for 30-year fixed-rate mortgage (FRM) averaging 4.11 percent with an average 0.8 point for the week ending Oct. 20.
That's virtually unchanged from 4.12 last week, and not far above the all-time low in records dating to 1971 of 3.94 percent set during the week ending Oct. 6. Rates on the popular 30-year fixed-rate mortgage were at 4.21 percent this time a year ago, before climbing to a 2011 high of 5.05 percent in February.
For 15-year fixed-rate mortgages, rates averaged 3.38 percent with an average 0.8 point, essentially unchanged from 3.37 percent last week. The 15-year mortgage hit an all-time low in records dating to 1991 of 3.26 percent during the week ending Oct. 6.
At this time a year ago, 15-year loans were averaging 3.64 percent, before climbing to a 2011 high of 4.29 percent in February.
Rates on five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans averaged 3.01 percent with an average 0.6 point, down slightly from 3.06 percent last week, and not far off the all-time low in records dating to 2005 of 2.96 percent registered during the week ending Oct. 6. A year ago, the five-year ARM averaged 3.45 percent, before hitting a 2011 high of 3.92 percent in February.
The one-year Treasury-indexed ARM averaged 2.94 percent with an average 0.6 point, up from 2.9 percent last week but still within range of a low in records dating back to 1984 of 2.81 percent seen during the week ending Sept. 15. At this time last year, the one-year ARM averaged 3.3 percent before hitting a 2011 high of 3.4 percent in February.
Looking back a week, a separate survey by the Mortgage Bankers Association showed demand for purchase loans fell a seasonally adjusted 8.8 percent during the week ending Oct. 14, to the lowest level since December 1996. Purchase loan demand was down 5.1 percent from the same time a year ago.
Applications to refinance were down 16.6 percent from the previous week, but refi requests still accounted for 77.6 percent of all mortgage loan applications.
In a forecast issued Monday, economists at Fannie Mae said they expect rates on 30-year fixed-rate mortgage loans to average 4 percent next year and 4.2 percent in 2013. Fannie Mae's forecast calls for sales of new and existing homes to grow by less than 1 percent next year, to 5.28 million, before picking up by 6.5 percent in 2013.
"In this type of environment, the housing market remains very sluggish and consumers' willingness to dig into their savings to purchase big-ticket items is very low," said Fannie Mae chief economist Doug Duncan in a statement. Duncan said leading indicators "point to housing sales bouncing near the bottom at least through the end of 2012."
The large inventory of distressed homes working their way through the market is putting downward pressure on prices, Duncan said, and with fall and winter being a weak seasonal sales period home prices are likely to show declines after firming for several months.
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