July 12, 2012
Whoops, They Did It Again: Mortgage Rates Hit New All-Time Lows
According to Freddie Mac’s latest Primary Mortgage Market Survey, 30-year fixed-rate mortgage rates averaged 3.56 percent (with 0.7 points) for the week ending today, another new all-time low, down from 3.62 percent last week, down from 3.67 percent last month and versus 4.51 percent a year ago.
The average 15-year fixed mortgage rate also recorded a new all-time record low of 2.86 percent, down from 2.89 percent last week, down from 2.94 percent last month and versus 3.65 percent a year ago.
As rates dropped, mortgage applications to purchase homes in the U.S. increased 3 percent last week adjusted for the Fourth of July, down an unadjusted 3 percent year-over-year. Refinancing activity decreased 3 percent according to the Mortgage Bankers Association.
∙ Another Week Of Record-Breaking Lows For Fixed-Rate Mortgages [Freddie Mac]
∙ Mortgage Rates Hit All-Time Lows (Yes, Again) [SocketSite]
∙ Mortgage Applications Decrease in Latest MBA Weekly Survey [mbaa.org]
First Published: July 12, 2012 9:30 AM
Comments from "Plugged In" Readers
I wonder how the variable rates will turn out if the brits are no more able to manipulate their now infamous LIBOR.
Posted by: lol at July 12, 2012 10:16 AM
Will the LIBOR be the cause of the tsunami we were promised?
Posted by: sparky-b at July 12, 2012 11:24 AM
Well as far as I can tell the LIBOR rates have not been moving all that much lately. So far this scandal does not seem to be impacting the current LIBOR.
Posted by: Rillion at July 12, 2012 11:39 AM
Yeah, the deed happened 3 years ago when British banks should have given actual real life rates. It could have impacted LIBOR and deepened the real estate crash. Now we're in a world where banks are semi-zombies/semi-healthy and RE is slowly recovering.
Manipulating LIBOR probably saved them a lot of pain, especially Barclay's who was selling the family jewels to avoid being under government control.
If we have another credit event things could be different for LIBOR though.
Still a bit revolting. 2 words: hubris and deceit. Where are the free markets these very same banks spend millions lobbying for?
Posted by: lol at July 12, 2012 12:16 PM
Maybe time to think about another refi. 2.86% is pretty close to zero inflation-adjusted!
Posted by: Jimmy (No Longer Bitter) at July 12, 2012 12:23 PM
No wonder why we had a very obvious suspension of basic rules during the first years of the RE crisis.
- High default rates should have led to higher rates. Fixed rates were pushed down by Central banks, and variable rates were set by LIBOR.
Riskier mortgages with variable rates should have been saddled with higher rates through the logical:
0 - mortgage defaults
1 - bank loss
2 - higher borrowing cost for banks due to higher risk
3 - higher LIBOR
4 - higher variable rates
This is how it's supposed to work. eventually higher rates would lead to more mortgage defaults until the system is flushed out of bad paper.
Instead what we got were millions over millions of zombie borrowers, underwater and unable to refi when many should have had to default and realize the loss.
Of course, now that RE has picked up, it's safe to unveil the manipulations...
Posted by: lol at July 12, 2012 12:33 PM
LIBOR is not what is used for lots of adjustable rate mortgages. It is just the next possible thing that maybe, hopefully, will kick start the tsunami.
Posted by: sparky-b at July 12, 2012 8:36 PM
Not for all, but for many. Mine is based on LIBOR, for instance, after the 5 years fixed. How about your super low rate?
My point is that rates were kept ultra low for obvious reasons. Rate "control", along with QE and pacing the rate of foreclosures,are the few places where banks, Treasury and central banks could control the damage. They probably saved a lot of extra pain to many though. It's still not what a working system should look like.
Posted by: lol at July 13, 2012 7:31 AM
Mine is not based on LIBOR, it's based on 12MTA.
The post above is part of your point, the original was what will happen if "the brits are no more able to manipulate their now infamous LIBOR". My question is how much will it effect rates with the US keeping the policies you laid out above and only some portion of the variable rates based on LIBOR.
Posted by: sparky-b at July 13, 2012 7:43 AM
Wow, looking at the 12MTA, this is a great outcome for you.
I guess this policy did its job. It bought time until the next wave.
Posted by: lol at July 13, 2012 9:18 AM