Dramatic Turn in Mortgage Rates
Below is a MRR and PLR article in category Finance -> subcategory Mortgage.
Dramatic Shift in Mortgage Rates
Overview
Recent data from Freddie Mac's Primary Mortgage Market Survey indicates significant declines in both long-term and short-term conventional mortgage interest rates. This comes ahead of the Federal Reserve’s decision to cut rates by half a point.While the Federal Reserve’s rate cuts aren't directly tied to mortgage rates, there's a notable connection between them. Both Freddie Mac and the Mortgage Bankers Association predict mortgage interest rates will continue to fall in the coming weeks.
Recent Rate Trends
Last week, the average rate for a 30-year fixed mortgage dropped to 6.31% with 0.5 points, 15 basis points lower than the previous week. This marks the lowest rate since May 17, when it hit 6.21% with 0.4 points. At this time last year, the rate was 6.43%.
Similarly, the 15-year fixed mortgage rate fell from 6.15% with 0.6 points to 5.97% with 0.4 points. Again, this is one of the lowest rates since May 17, when it was 5.92%. In comparison, last year's rate was 6.11%.
The one-year adjustable-rate mortgage (ARM) saw a decrease of 12 basis points from an average of 5.74%, even though fees and points rose from 0.6 to 0.8.
Impact on Borrowers
The drop in rates for both the 30-year and 15-year fixed mortgages offers a potential advantage for borrowers looking to refinance or buy a home. Current rates are lower than those of the same period last year. However, recent borrowers who secured loans before these reductions continue to feel dissatisfied.
According to the Mortgage Bankers Association, rates ticked up slightly this week. The 30-year fixed mortgage rose from 6.25% to 6.29%, and the 15-year fixed increased from 5.90% to 5.99%.
Mortgage Activity
Mortgage activity climbed by 2.4% after seasonal adjustments, following the shortened week due to the Labor Day holiday. Unadjusted, there was a 25.6% increase, which is 12.8% higher than the same period in 2006.
Refinance mortgages now account for 43.5% of total mortgage activity, up from 42.1% last week. Meanwhile, the share of adjustable-rate mortgage applications declined from 13.2% to 12.6%.
In summary, the recent decline in mortgage rates presents opportunities for borrowers, even as slight adjustments continue to occur in the market.
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