Mixed news keeps mortgage rates low

By Palm Beach Business.com

DELRAY BEACH – Mortgage rates bounced back up this week, but not by much.

Freddie Mac’s Primary Mortgage Market Survey found the 30-year fixed-rate mortgage averaging 5.42 percent with an average 0.7 point, up from last week’s 5.38 percent. Last year at this time, the 30-year FRM averaged 6.45 percent.

Bankrate’s national mortgage survey has the 30-year at 5.80 with 0.45 point, up from 5.76 a week ago.

“Mixed economic reports on the state of the housing market helped hold mortgage rates fairly flat this week,” Freddie Mac Chief Economist Frank Nothaft said. “Existing home sales rose for the second consecutive month in May by 2.4 percent, slightly less than the market consensus forecast; however the median sales price was 16.8 percent below that of the same time last year, according to the National Association of Realtors In contrast, new home sales fell 0.6 percent and the median sales price was only 3.4 percent lower than May 2008.

"On a more positive note, the inventory of unsold homes has lessened from a year ago, which may help cushion further house price declines. The number of existing homes for sale was 15.3 percent below that of May 2008, and new homes for sale fell by 35.9 percent. In addition, distressed properties accounted for only about one-third of existing home sales in May, down from over a half in March, according to the NAR.”

Bankrate’s report noted the performance of the economy and the outlook for inflation are likely to be the key drivers of Treasury yields and mortgage rates in the coming months. Mortgage rates are closely related to yields on long-term government debt.

The Fed Wednesday moved to reassure the financial markets by keeping its key interest rate at between 0 and 0.25 percent while stating that the risk of inflation is low.

Also from the Freddie Mac survey:

— The 15-year fixed rate averaged 4.87 percent with an average 0.7 point, down from 4.89 percent

— Five-year adjustable-rate mortgages averaged 4.99 percent this week, with an average 0.7 point, up from last week’s 4.97 percent.

— One-year ARMs averaged 4.93 percent this week with an average 0.7 point, down from last week’s 4.95 percent.

Also from the Bankrate survey: The average 15-year fixed rate mortgage inched lower to 5.16 percent, while the average jumbo 30-year fixed rate pushed above the 7 percent mark to 7.03 percent. Adjustable rate mortgages were generally lower, with the average 3-year ARM falling to 5.32 percent and the 5-year ARM dropping to 5.26 percent.

According to Bankrate, a year ago, the average 30-year fixed mortgage rate was 6.62 percent, meaning a $200,000 loan would have carried monthly payments of $1,279.96. At 5.80 percent, the monthly payment for that loan would be $1,173.51, a difference of $107 a month.

Meanwhile, Bankrate’s panel of experts sees mortgage rates most likely dropping or staying put over the next 30-45 days. Nearly half — 46 percent — see rates falling, while 31 percent see rates staying put. Only 23 percent see rates rising.

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