Mortgage rates hold but change could be a comin'

By Palm Beach Business.com

mortgage chart for south floridaDELRAY BEACH — Mortgage rates continue to be rather static, with the 30-year fixed barely moving, according to two major national surveys. Rates locally followed the national trend, according to Palm Beach Business.com’s South Florida Survey.

However, the days of relative calm, could be numbered as March draws to an end.

Freddie Mac’s Primary Mortgage Market Survey spotted the average 30-year fixed-rate mortgage at 4.96 percent with an average 0.7, up slightly from last week’s 4.95 percent.
Bankrate.com pegged the 30-year at 5.07 percent, down from 5.08 percent a week ago. In South Florida, rates held pretty much the same as last week.

Both Freddie Mac and Bankrate surveys had the 15-year moving slightly higher. According to Freddie Mac, the 15-year averaged 4.33 percent with an average 0.6 point, up from 4.32 percent a week ago. Bankrate had it at 4.45 percent, with 0.38 point, up from 4.43 percent last week.

"Mortgage rates for fixed-rate mortgages were virtually unchanged this week as the effects of the prior storms emerged in recent housing data," Freddie Mac Chief Economist Frank Nothaft said.  "New construction slowed by 5.9 percent in February to 575,000 homes.  Both the South and Northeast regions had all the declines due to the snow storms.  In addition, homebuilder confidence unexpectedly dipped in March according to the NAHB/Wells Fargo Housing Market Index .

"With house prices starting to stabilize and even rise, homeowners on aggregate are slowly building back equity in their homes based on figures from the Federal Reserve Board .  After losing almost $7.9 trillion in home equity since the end of 2006, homeowners regained almost $1.1 trillion over the past three quarters ending in 2009."

Bankrate noted that mortgage rates have fluctuated within a narrow range of just one-tenth of one percentage point in the past two months. But while the Federal Reserve is maintaining the pledge to keep short-term interest rates "exceptionally low" for "an extended period," this doesn't necessarily dictate what happens with fixed mortgage rates.

Far more significant is the Fed's program of buying mortgage-backed securities, which will come to a halt as planned by the end of the month. With the Fed no longer serving as the dominant buyer of mortgage securities, the days of low volatility appear numbered. The Fed reaffirmed its plan to end the purchases when it met this week.

But in the very near term, rates are likely to remain pretty much where they are. The majority of Bankrate’s panel of mortgage experts see rates staying where they are over the next week; a third  expects mortgage rates to rise but just 8 percent forecast further declines.

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MARCH 19, 2010 click to go home
 
     
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