mortgage

Mortgage rates fall, along with stock prices and new home sales

Mortgage rates fell this week, following disappointing economic data and stock market declines.

Consumers lose confidence

The fluctuations in oil prices continue to impact the global economy, and markets were also upset by the slump in consumer confidence. The Conference Board said Tuesday that its index fell to a 7-month low due to Americans growing more pessimistic about business conditions, employment opportunities and the stock market.

This pushed investors into government bonds, sending prices higher and yields lower. On Wednesday, the 10-year Treasury note yield reached an intraday low of 1.65%, though it moved higher after oil recovered some of its losses.

Mortgage rates typically follow the direction of long-term government bond yields.

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A look at this week's rates

  • The benchmark 30-year fixed-rate mortgage fell to 3.8% from 3.85%, according to Bankrate's Feb. 24 survey of large lenders. A year ago, it was 3.9%. Four weeks ago, the rate was 3.94%. The mortgages in this week's survey had an average total of 0.2 discount and origination points. Over the past 52 weeks, the 30-year fixed has averaged 4%. This week's rate is 0.2 percentage points lower than the 52-week average.
  • The benchmark 15-year fixed-rate mortgage fell to 3.09% from 3.12%.
  • The benchmark 30-year fixed-rate jumbo mortgage fell to 3.7% from 3.75%.
  • The benchmark 5/1 adjustable-rate mortgage fell to 3.24% from 3.28%.

Weekly national mortgage survey

Results of Bankrate.com's Feb. 24, 2016, weekly national survey of large lenders and the effect on monthly payments for a $165,000 loan:

30-year fixed15-year fixed5-year ARM
This week's rate:3.8%3.09%3.24%
Change from last week:-0.05-0.03-0.04
Monthly payment:$768.83$1,146.62$717.19
Change from last week:-$4.70-$2.39-$3.62

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Mortgage analysis

Mixed results for home sales

Sales of existing homes increased 0.4% from December to January, the National Association of Realtors reported Tuesday. Sales came in at a seasonally adjusted annual rate of 5.47 million last month, up from a downwardly revised 5.45 million. Over the year, existing-home sales jumped by 11%.

The median price for existing homes for all housing types -- single-family homes, townhomes, condos and co-ops -- was $213,800, which is 8.2% higher than the January 2015 median price. Housing inventory increased 3.4% month over month but is down 2.2% compared with a year ago. There was a 4-month supply of existing homes for sale at the end of January.

New home sales plunged nearly 10% from December to January and were down 5.2% from January 2015, according to data released Wednesday from the U.S. Census Bureau and the Department of Housing and Urban Development. The median sales price was $278,800, while the average sales price was $365,700.

A slowdown in new home sales is expected because January is usually a slow month, still the census data came as somewhat of a surprise, says Brett Sinnott, vice president of capital markets for CMG Financial in San Ramon, California.

"It was more of a surprise just because interest rates have fallen so low right after the Fed increase," he says, referring to the Federal Reserve's decision to raise the federal funds rate in December.

Ready to refi?

Mortgage applications fell by 4.3% last week compared with the week prior, according to the Mortgage Bankers Association's weekly survey. The results include an adjustment for the Presidents Day holiday.

The unadjusted purchase index was down 4%, though it was 27% higher than the same week in 2015.

Although it's likely that rates will stay low for a while, current homeowners should be proactive about getting a better deal on their loan before lenders become extremely busy in the near future, says Dave Norris, executive vice president of retail at loanDepot in Foothill Ranch, California.

"It's a great time to refi; rates haven't been this low in years," he says.

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