Mortgage rates dip to 2017 low, but homebuyers sit on the sidelines

Mortgage rates have dipped to their lowest level of 2017, just in time for homebuying season. Uh, we’re going to have a homebuying season this year, right?

With the 30-year, fixed-rate mortgage averaging 4.16 percent this week, home loans haven’t been this low since December. You would think this would be the perfect opportunity for would-be homeowners to shop for mortgages and then to get out there and look at houses. But that’s not happening, at least on the mortgage side of the equation.

There aren’t enough homes to buy

Homebuyers applied for fewer mortgages last week than they did the same week a year before, according to the Mortgage Bankers Association. The year-over-year decline was just 1 percent, but still, a soft beginning to homebuying season isn’t what forecasters expected. After all, more people have jobs. Maybe fewer people applied for mortgages last week because of Good Friday, or maybe the year-over-year decrease is due to the fact that mortgage rates were a lot lower a year ago.

But the most likely explanation is that not enough houses are for sale. When people can’t find homes to buy, they don’t apply for mortgages. The inventory of homes for sale, especially for starter homes, is at its lowest level in more than 10 years, according to Freddie Mac’s latest economic outlook, “Where Have All the Houses Gone?

The note points out that in February, the typical home was sold after being on the market for three months. That’s an abnormally short time on market. From 1985 to 2015, homes typically were on the market for 5.3 months before they were sold — almost twice as long as in February. Those stats come from the National Association of Realtors, which issues its next Existing Home Sales report on Friday — and it will show that there’s still a shortage of homes for sale. The only question is whether the shortage got worse or if it eased up a bit.

We need more new homes

Homebuilders aren’t going to rescue desperate would-be homeowners. Housing starts in March were at a seasonally adjusted annual rate of 1.22 million units, according to the Census Bureau. That’s well below the 1.7 million new homes we need to replace torn-down homes, accommodate new households and provide second homes for those who can afford them. In other words: We need builders to construct half a million more homes per year than they’re building. Too bad they’re not doing it now, so buyers could take advantage of today’s low mortgagerates.

Mortgage rates this week

The benchmark 30-year fixed-rate mortgage fell this week to 4.16 percent from 4.22 percent, according to Bankrate’s weekly survey of large lenders. A year ago, it was 3.75 percent. Four weeks ago, the rate was 4.29 percent.

The 30-year fixed mortgages in this week’s survey had an average total of 0.28 discount and origination points.

Over the past 52 weeks, the 30-year fixed has averaged 3.92 percent. This week’s rate is 0.24 percentage points higher than the 52-week average.

  • The 15-year fixed-rate mortgage fell to 3.35 percent from 3.43 percent.
  • The 5/1 adjustable-rate mortgage fell to 3.42 percent from 3.46 percent.
  • The 30-year fixed-rate jumbo mortgage fell to 4.07 percent from 4.15 percent.

At the current 30-year fixed rate, you’ll pay $486.69 for every $100,000 you borrow, down from $490.19 last week.

At the current 15-year fixed rate, you’ll pay $707.54 for every $100,000 you borrow, down from $711.45 last week.

At the current 5/1 ARM rate, you’ll pay $444.59 for every $100,000 you borrow, down from $446.81 last week.

Weekly national mortgage survey

Results of’s weekly national survey of large lenders conducted April 19, 2017 and the effect on monthly payments for a $165,000 loan:

30-year fixed 15-year fixed 5-year ARM
This week’s rate: 4.16% 3.35% 3.42%
Change from last week: -0.06 -0.08 -0.04
Monthly payment: $803.03 $1,167.44 $733.58
Change from last week: -$5.78 -$6.45 -$3.66

Why mortgage rates are falling

Mortgage rates have been on the decline for a month. They’ve been falling for a confluence of factors including global political tensions. In times of uncertainty, investors buy American bonds, causing yields to fall and mortgage rates to go down. In the States, tax reform and infrastructure legislation are going nowhere fast, and that leads to lower rates, too. For buyers who are ready, it’s a good time to shop for mortgages.