By Nicole.Rasic@nafinc.com
October 10, 2014
Freddie Mac's latest Primary Mortgage Market Summary offered further promise for prospective homebuyers. Fixed mortgage rates continued to stay low by historical standards, with the average 30-year rate falling to a new low for the year at 4.12 percent through the week ending Aug. 14. One year earlier, the average 30-year fixed rate was 4.4 percent, and a week earlier it sat at 4.14 percent. Fifteen-year fixed-rate mortgages averaged 3.24 percent through the same period, down from 3.27 percent the previous week and 3.44 percent in mid-August 2013. The average five-year Treasury-indexed hybrid adjustable-rate mortgage was also down on both a week-over-week and year-over-year basis, settling at 2.97 percent, while one-year Treasury-indexed ARMs rose slightly to an average of 2.36 percent. "Mortgage rates were down slightly amid a week of light economic reports," said Frank Nothaft, Freddie Mac's chief economist. "Of the few releases, retail sales were virtually unchanged in July after a 0.2 increase in June, ending five months of increases. Excluding motor vehicles and parts, retail sales were up 0.1 percent last month." Potential sales surge on the horizon Even as the Federal Reserve continues to taper its stimulus program, reducing the rate of asset purchases by $10 billion each month, interest levels have not complicated the buying process by moving upward as many had anticipated. The hope among industry members is that the low mortgage rates will trigger a surge in homebuying activity, and if applications rates from July are any indication, a sales push may be coming. The latest Builder Application Survey from the Mortgage Bankers Association revealed new home purchase applications were on the upswing in July, increasing 2 percent from June. The average loan size grew slightly to $297,253, with conventional loans accounting for nearly 69 percent of all applications. Loans from the Federal Housing Administration and the U.S. Department of Veterans Affairs continued to play key roles in driving marketplace activity, representing 16.1 percent and 13.6 percent of the mortgages applied for in July, respectively. Based on the most recent mortgage application information, MBA estimated there were approximately 37.000 new home sales in July, representing a 2.8 percent improvement from the June rate. A number of other factors - most notably labor strength and available inventory - will dictate sales for the rest of 2014, but recent figures for mortgage applications volume and interest rate movement are encouraging.