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Monday, November 07, 2005 3:52:02 AM
Mortgage rates hit 18-month high
*See also #msg-8317636 "Construction Spending Hits All-Time High"... also wasn't it Mr. Greenspan who was recommending ARMs??? Oh... how quickly this complacent market seems to forget... Have fun in your retirement Greenspan, hope you printed up enough green paper for yourself...
Mortgage rates hit 18-month high
-- Posted: Nov. 3, 2005
By Holden Lewis • Bankrate.com
Mortgage rates have gone up for the eighth week in a row.
The benchmark 30-year, fixed-rate mortgage rose 13 basis points to 6.37 percent, according to the Bankrate.com national survey of large lenders. A basis point is one-hundredth of 1 percentage point. The mortgages in this week's survey had an average total of 0.33 discount and origination points. One year ago, the mortgage index was 5.72 percent, and four weeks ago it was 6.07 percent. In early September, before this eight-week streak began, the 30-year averaged 5.8 percent.
The last time 30-year, fixed rates were this high was nearly 18 months ago, on May 12, 2004, when the benchmark rate was also 6.37 percent.
The benchmark 15-year, fixed-rate mortgage rose 12 basis points, to 5.91 percent. The benchmark 5/1 adjustable-rate mortgage rose 8 basis points, to 5.9 percent.
Fewer people are applying for home loans, but apparently not only because of rising rates. According to the Mortgage Bankers Association, mortgage applications were down 4.8 percent last week, compared to the previous week; and down 15.2 percent, compared to the same week last year.
"This decline is consistent with our expectations of a softening from the record level of new-home sales during the first three quarters of 2005," says Doug Duncan, the mortgage association's chief economist.
For months, economists have been predicting that 2005 would be a record year for new-home sales, but that they would decline in the last three months of the year. It's too early to say for sure whether that's happening yet, but the small decline in mortgage applications provides a hint.
Weather might have played a factor, too. The association did not estimate the impact of Hurricane Wilma, which plunged most of South Florida into darkness and, doubtlessly, caused delays in mortgage applications.
Even as rates have risen, applications have remained strong for refinanced mortgages. More than 40 percent of applications are from homeowners who want to refinance. Why are so many people refinancing when the average rate on a 30-year fixed has risen a quarter of a percentage point in a little over a month?
"I think the big answer is rates are still low, from a historical perspective," says Jim Svinth, executive vice president, capital markets for LendingTree. "A mentality with borrowers, particularly when they see rates increase from a low level, is, 'This is it. If I'm going to refinance, I'd better do it.'"
Svinth theorizes that some homeowners are switching from adjustable-rate mortgages to fixed-rate home loans, a practice that other bankers have called "dis-ARMing." To understand why people do this, consider what has happened, since the beginning of the year, to the 30-year fixed and to the most popular ARM, the 5/1 hybrid.
In early January, the average rate on a 30-year fixed was 5.76 percent and the average rate on a 5/1 ARM was 5.08 percent. Since then, the rate on the 30-year has risen 59 basis points, while the rate on the 5/1 ARM has gone up 74 basis points. ARM rates have climbed faster than fixed rates, so people are motivated to dis-ARM.
People are almost surely taking a higher rate when they switch from an ARM to a fixed-rate loan. But they don't have to worry about the rate rising in the future. Anyway, Svinth says, "6 percent, 6.25 percent is still a smoking deal, by historical standards."
That assertion is hard to argue with. In Bankrate's mortgage surveys, the average rate on a 30-year fixed was 7.46 percent in 1999; 8.08 percent in 2000; 7.01 percent in 2001; and 6.55 percent in 2002. The annual average was below 6 percent in 2003 and 2004, and has been 5.85 percent so far this year -- but that happy streak of rock-bottom rates looks to end in 2006.
LINK: http://www.bankrate.com/brm/news/mtga/20051103a1.asp
*See also #msg-8317636 "Construction Spending Hits All-Time High"... also wasn't it Mr. Greenspan who was recommending ARMs??? Oh... how quickly this complacent market seems to forget... Have fun in your retirement Greenspan, hope you printed up enough green paper for yourself...
Mortgage rates hit 18-month high
-- Posted: Nov. 3, 2005
By Holden Lewis • Bankrate.com
Mortgage rates have gone up for the eighth week in a row.
The benchmark 30-year, fixed-rate mortgage rose 13 basis points to 6.37 percent, according to the Bankrate.com national survey of large lenders. A basis point is one-hundredth of 1 percentage point. The mortgages in this week's survey had an average total of 0.33 discount and origination points. One year ago, the mortgage index was 5.72 percent, and four weeks ago it was 6.07 percent. In early September, before this eight-week streak began, the 30-year averaged 5.8 percent.
The last time 30-year, fixed rates were this high was nearly 18 months ago, on May 12, 2004, when the benchmark rate was also 6.37 percent.
The benchmark 15-year, fixed-rate mortgage rose 12 basis points, to 5.91 percent. The benchmark 5/1 adjustable-rate mortgage rose 8 basis points, to 5.9 percent.
Fewer people are applying for home loans, but apparently not only because of rising rates. According to the Mortgage Bankers Association, mortgage applications were down 4.8 percent last week, compared to the previous week; and down 15.2 percent, compared to the same week last year.
"This decline is consistent with our expectations of a softening from the record level of new-home sales during the first three quarters of 2005," says Doug Duncan, the mortgage association's chief economist.
For months, economists have been predicting that 2005 would be a record year for new-home sales, but that they would decline in the last three months of the year. It's too early to say for sure whether that's happening yet, but the small decline in mortgage applications provides a hint.
Weather might have played a factor, too. The association did not estimate the impact of Hurricane Wilma, which plunged most of South Florida into darkness and, doubtlessly, caused delays in mortgage applications.
Even as rates have risen, applications have remained strong for refinanced mortgages. More than 40 percent of applications are from homeowners who want to refinance. Why are so many people refinancing when the average rate on a 30-year fixed has risen a quarter of a percentage point in a little over a month?
"I think the big answer is rates are still low, from a historical perspective," says Jim Svinth, executive vice president, capital markets for LendingTree. "A mentality with borrowers, particularly when they see rates increase from a low level, is, 'This is it. If I'm going to refinance, I'd better do it.'"
Svinth theorizes that some homeowners are switching from adjustable-rate mortgages to fixed-rate home loans, a practice that other bankers have called "dis-ARMing." To understand why people do this, consider what has happened, since the beginning of the year, to the 30-year fixed and to the most popular ARM, the 5/1 hybrid.
In early January, the average rate on a 30-year fixed was 5.76 percent and the average rate on a 5/1 ARM was 5.08 percent. Since then, the rate on the 30-year has risen 59 basis points, while the rate on the 5/1 ARM has gone up 74 basis points. ARM rates have climbed faster than fixed rates, so people are motivated to dis-ARM.
People are almost surely taking a higher rate when they switch from an ARM to a fixed-rate loan. But they don't have to worry about the rate rising in the future. Anyway, Svinth says, "6 percent, 6.25 percent is still a smoking deal, by historical standards."
That assertion is hard to argue with. In Bankrate's mortgage surveys, the average rate on a 30-year fixed was 7.46 percent in 1999; 8.08 percent in 2000; 7.01 percent in 2001; and 6.55 percent in 2002. The annual average was below 6 percent in 2003 and 2004, and has been 5.85 percent so far this year -- but that happy streak of rock-bottom rates looks to end in 2006.
LINK: http://www.bankrate.com/brm/news/mtga/20051103a1.asp
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