Current Mortgage Rates Remain Low as Refinance Activity Declines

We continue to see low current mortgage rates as we head into May. Mortgage rates which have been hovering just above record lows increased slightly in the Weekly Application Survey released by the Mortgage Bankers Association.

In the survey, mortgage rates on 30 year conforming mortgages averaged 4.05% with 0.44 mortgage points for the week ending April 27, up from last week's average 30 year rate of 4.04% with 0.40 points. We will see rates decrease in next week's survey, in fact 30 year rates will probably drop below 4.00% since Treasury yields have declined since April 27Th.

15 year mortgage rates today made an all-time record low in the survey this week. Today's mortgage rates on 15 year conforming loans are averaging 3.31% with 0.41 points. 15 year rates will make another record low in next week's survey, thanks to lower bond yields.

5/1 adjustable mortgage rates increased to 2.87% this week, an increase from last week's average 5 year adjustable rate of 2.81%. As with fixed rates, adjustable rates will also decrease in the coming days since bond yields are lower.

Low mortgage rates are slowly bringing home buyers back to the market as the MBA's index that monitors mortgage applications for home purchases increased 2.9% from one week earlier.

The MBA's Refinance Index, which measures applications for mortgage refinances declined this week. The Refinance Index decreased 0.7% from one week earlier.

Although refinance rates remained low many homeowners in a position to refinance have done so already.  The refinance share of mortgage activity decreased to 72.6 percent of total mortgage applications, down from 73.4 percent the previous week.

There are also millions of homeowners who would like to refinance their loans but are unable to do so because of not having enough equity in the home or even having negative equity, owing more than the home is worth.

Until housing prices start increasing again many people are stuck with a higher mortgage than then they can get today. Home prices won't move higher until the economy is strong and consumer confidence in housing is back.

When the economy has legs and confidence is higher interest rates and mortgage rates will move higher causing many to miss out on record low mortgage rates today.

Author: Brian McKay
May 2nd, 2012

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