Mortgage rates slipped again this week, setting new records, amid uncertainty in the economic arena. The refinance boom seems to be fading, as lenders focus on closing loans they started in recent weeks.
The benchmark 30-year fixed-rate mortgage fell 4 basis points this week, to 4.37 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 0.38 discount and origination points. One year ago, the mortgage index was 4.53 percent; four weeks ago, it was 4.54 percent.
The benchmark 15-year fixed-rate mortgage fell 15 basis points, to 3.48 percent. The benchmark 5/1 adjustable-rate mortgage fell 5 basis points, to 3.07 percent, and the 30-year, fixed-rate jumbo fell 5 basis points, to 4.89 percent.
This is the lowest rate on the 30-year fixed since Bankrate started the weekly mortgage survey nearly 26 years ago. The fixed rate hit a previous record last week when it reached 4.41 percent. This week set records for the 15-year fixed, the 5/1 ARM and the jumbo, too. All reached record lows in the history of Bankrate's weekly surveys.
Weekly national mortgage survey
Results of Bankrate.com's Aug. 31, 2011, weekly national survey of large lenders and the effect on monthly payments for a $165,000 loan:
Despite the attractive rates, fewer borrowers applied for mortgages last week. The volume of mortgage applications decreased 9.6 percent this week compared to the previous week, according to the Mortgage Bankers Association's weekly survey.
Some brokers say the decline in volume is not a sign that borrowers have lost interest in refinancing. They say brokers and lenders are simply busy processing and closing the recent wave of mortgage applications they took when rates plunged a few weeks ago. When the rates plummeted recently, mortgage professionals reached out to clients to alert them of refinancing opportunities. That and the press about the historically low rates contributed to a surge in refinance applications that lasted about two weeks.
"Now, (lenders) are concentrating on closing those loans rather than originating new loans," says Brett Sinnott, director of secondary marketing at CMG Mortgage in San Ramon, Calif.
Some lenders raising rates to slow traffic
The recent wave of loan applications, which some characterize as a mini refi boom, also caused some lenders to actually raise their interest rates in an effort to slow the number of new applications.
"Sometimes rates go up even when the market says they should go down," says Dan Green of Watersone Mortgage in Cincinnati. "(Some) lenders are raising rates because they are overwhelmed," Green says.