With weaker housing data continuing to weigh on the market, the average rate for a conforming 30-year mortgage fell from 4.32 to 4.23 percent over the past week and is now 35 basis points below the 4.58 percent two-year high rate recorded this past August and within one percentage point of the all-time low of 3.31 percent recorded in November 2012.
The average 30-year fixed mortgage rate was 3.53 percent at this time last year, a little over half the 6.71 percent it has averaged since 1990. The fixed 30-year mortgage rate has averaged 8.61 percent over the past 40 years.
As we reported yesterday, despite an increase in the number of existing homes listed for sale in U.S. on a year-over-year basis, applications for mortgages to purchase a home are down 17 percent and the National Association of Realtors Pending Home Sales Index has fallen to its lowest level since 2011, down 8.8 percent year-over-year.

30 thoughts on “Mortgage Rates Continue To Fall Along With Home Sales”
  1. …fewer buyers from China?
    …maybe the all-cash hedge funds and private equity buyers nave less to play with because of the attenuation of QE2?
    …nervousness about the 5774% increase in Twitter’s net loss?

  2. I work in real estate and have yet to see one offer from a hedge fund or private equity buyer on a single-family residences in the past two years. They are simply not a factor in this market. At all. (Chinese cash, however, is). Now, if you are talking about private individuals or developers who create LLCs to mask their identity on title, then yes, that happens frequently, but it is the same thing as a person buying a house. Your comprehension is wildly off here.
    Everybody is entitled to an opinion, but two beers, you are constantly speaking to a crowd that knows what they are talking about with facts that are egregiously incorrect. It is not the contrarian opinion that frustrates me, but the bold assertations, time and time again, of “facts” that are absolutely incorrect and have no basis in reality.
    Once again, I am going to ask because you dodge the question time and time again, what is your field of expertise? What is your job? What degrees do you have? What experience, if any, do you have with urban planning, real estate, development, or construction? This is a rhetorical question, because I know the answer is none. If you want to join the conversation, do so, all are welcome, but stop arrogantly spouting off ridiculous claims about market factors, economics, and development as if you know something. It is wildly delusional. The emperor wears no clothes and everybody sees it.

  3. I’m an anonymous internet poster. Who I say I am is irrelevant. All that should matter is whether my argument is sound and my facts are accurate.
    I’m not an authority, unlike expert economists like Greenspan, Bernanke, David Lereah, and Lawrence Yun, none of whom could see the largest housing bubble in world history.
    “It is difficult to get a man to understand something, when his salary depends on his not understanding it.” – Upton Sinclair
    Thank you for confirming the presence of Chinese flight capital.
    You haven’t seen evidence of hedge and private equity funds in the market, but what is your estimation of all-cash buyers in SF? I take it you disagree with my point that the all-cash market is an explicit manifestation of QE2? Do you expect the all-cash segment to be unaffected by the end of QE2? As QE2 wanes, who do you expect to pick up the slack?
    Who _is_ buying all these properties? Newly-minted twitter millionaires? Do you think these stock-option millionaires are paying all cash? And what will happen when companies like twitter with 5774% increases in net loss lose their endless rounds of taxpayer-subsidized VC funding as QE2 dries up?
    By turning this into an ad hominem argument, you dodge my main point, which is that all-cash is a big part of the SF market, and that the waning of QE2 and the slowdown in China are going to eviscerate the all-cash market here.
    Ok, I’m arrogant and delusional, but please tell me what percentage of the market is all-cash, and then tell me how that segment will be sustained going forward in a shaky economy?
    http://blogs.kqed.org/newsfix/2014/01/24/all-cash-buyers-scoop-up-bay-area-real-estate/

  4. two beers,
    I am not in the real estate business. I am in my early fifties. I was an all cash buyer since I sold my previous residence and have had many years in which to accumulate savings. Given that I am at the tail end of the baby boomers, there are quite a few people just like me. Don’t assume that every cash purchase is from an institution.

  5. I take it you disagree with my point that the all-cash market is an explicit manifestation of QE2?
    Yes, I disagree with that, because it makes no sense if you know anything about how QE actually happens. Please explain how you think this “manifestation” would occur.

  6. “But Twitter remained unprofitable as costs continued to grow faster than revenue. For the fourth quarter, Twitter said its net loss widened to $511.5 million, or $1.41 a share, compared with a prior-year loss of $8.7 million, or seven cents a share. The increased costs were attributed to research and development, and sales and marketing.”
    from the wall st journal

  7. The root subject of the thread is national. T(ipster?)wo Beers took it local, oddly. In doing so, Two Beers intentionally left out tech as driving local factor. Is that because he or she doesn’t believe that average looking and acting, largely American, people are buying with all cash left, right, and center? Do people really think that in SF in 2014? Or is this just a flame?

  8. Ha ha 2 beers approach can be summarized thus:
    mortgage rates rise – bad for SF real estate
    mortgage rates fall – bad for SF real estate
    The End

  9. @parklife: I never said that all the cash sales were institutional or capital flight. But cash is making up a much larger part of the market than ever before, and fewer of them are owner-occupied.
    Does this affect this market in any way?
    @anon:
    QE2 has manifested in RE in several ways.
    Most obviously, in suppressing interest rates to historic lows, much longer than has ever been done before.
    Second, the Fed has bought up billions of dollars of underperforming MBS at 100% on the dollar. Don’t you think this has distorted the market? How much longer can the Fed keep buying up the Big Five’s underperforming paper, and what happens to RE when they stop?
    Finally, this buyout of deadbeat MBS has gifted Wall St with unprecedented liquidity and cash. Little of this has gone back to Main St, as Bernanke insisted it would. Instead, much of this has gone to margin debt (which has returned to bubble peak record highs) and RE speculation http://www.newrepublic.com/article/112395/wall-street-hedge-funds-buy-rental-properties.
    @anon: ($511,000,000-$8,700,000/$8,700,000)x100 = 5774% increase in net loss yoy
    @truth: Are we immune to the national economy?
    As for Tech, the record liquidity has lead to record margin debt propping up the tech sector. Without that liquidity, and without that margin debt, we wouldn’t have all of these unprofitable wonders: twitter, groupon, yelp, etc. There is legitimate tech (eg microsoft, adobe, google), but much of the current lot is just a replay of the dotcom bust. It’s different now, right? No deja vu, right?
    I really don’t think the most tech employees, whose wealth is mostly in stock, are paying all cash. Maybe I’m wrong. Considering the implications, isn’t it worth thinking about or do you believe this bubble will last forever?
    @REPornAddict: You have to define what you mean by “bad for SF real estate.”
    If you’re talking about banks, developers, landlords, and realtors, then lower interest rates are obviously preferable.
    If you mean, bad for affordablility, lower interest rates = higher prices, and higher interest rates = lower prices. For legitimate, qualified occupant buyers, higher interest rate markets are preferable. But what % of the market is legitimate, qualified occupant buyers?

  10. @two beers- But how can you complain both about leverage/debt/mortgage banking and about cash sales? Other than debt or cash, how else is anyone going to buy a house?
    Also, the hedge funds are mostly buying in flyover because you get much more rental income for your dollar there. If you think the hedge funds are onto something, why not buy a place there. If it’s a bubble, just sit it out.
    Same goes for SF Tech/Twitter, if it’s a bubble rent and short the stocks. If it’s real, buy.

  11. Most obviously, in suppressing interest rates to historic lows, much longer than has ever been done before.
    How is this obvious? The Fed sets the Fed funds rate. You assume that if they weren’t engaging in QE they’d be jacking up rates? Why? The whole reason for engaging in QE is that rates can’t be dropped lower. Why would not doing QE cause them to raise rates when the economic conditions call for them to drop rates, which they can’t do because they’re at zero…
    Rates are low because the economy still sucks. Are you arguing that the economy has improved enough that the Fed should begin raising rates?

  12. two beers,
    Institutional buyers make up a small percentage of SF sales. In fact, SF has one of the smallest percentages in the nation. Other, more challenged, real estate markets have a much higher percentage of institutional buyers.

  13. @ two beers,
    No i don’t think there’s a chance it goes on forever. But I think you’re grossly mislabeling what’s transpiring. You’re only thinking in terms of options and public companies. There are thousands more deals going on, and a fair amount of thise deals make people a lot of money. Why people like you do not tacitly acknowledge such facts is a head scratcher. Don’t you live in SF? Talk to people? Read the paper? Find out about “the house that sold up the block”? Nothing lasts forever of course but the monetization of the internet has its h.q. And it is here or nearby. Not only that but people come up with new stuff and do new deals every day. So the end is not in sight.

  14. “All that should matter is whether my argument is sound and my facts are accurate.”
    That’s precisely the point. Your facts are beyond inaccurate. For the most part, they are conjecture (your bizarre insistence that private equity is a key part of the market, for example, which has been disproved again and again), and when you do use facts, the conclusions you draw from them are bizarre and violate just about every economic principle known to man.
    And then when people who have experience mention anything, you say it’s just because our jobs or fields of expertise depend on certain outcomes (which they don’t, I’m as tired of skyrocketing prices and multiple offers as anybody, our clients can’t get into anything). So, by your stance, people with experience and knowledge know the least about the market and have nothing to add? Is this true about all careers? Should I get to say more about global warming than scientists?
    I’m done engaging with you.

  15. ^That just sounds like you’re saying that the economy has been terrible, but I don’t see what in the world that has to do with QE. Are you saying the economy is performing WORSE because of QE? That’s a bold statement. We should move a couple points above the lower bound because that would be better?
    The economy has been a disaster for the last five years, but IMO that’s because the Fed hasn’t done NEARLY enough QE. I’m talking at least an order of magnitude less than what it should be doing with its dual mandate. There is no inflation, so we should be pumping trillions more dollars into the system until unemployment is back down to a reasonable level.

  16. @two beers – But how are all the options bad? You can rent, or buy using cash or debt. You can go long or short tech or any other types of stocks?
    Nothing’s stopping you from being a bull or a bear.

  17. @anon2:
    I think you misunderstand me. I’m not asking how can I get rich. I’m asking what’s good for the long-term macro health of the American economy for people who are not in the FIRE sector.
    @3 beers:
    why the hostility?

  18. You still haven’t answered how QE causes what you say it causes.
    You’re concerned about things completely unrelated (like low interest rates).

  19. You never explained how interest rates would be higher in absence of QE. We’ve got two decades of Japanese data to look at, and it doesn’t support this theory that interest rates go up in absence of QE (when an economy is in a deflationary spiral, as we still are).

  20. @anon
    Why do you think the US is in a deflationary spiral?
    According to the BLS CPI (December 2013 report at namelink) the US had a 1.5% inflation in 2013 and we’ve had positive annual inflation every year for more than 50 years, except for 2009 when we had a -0.4% inflation rate.

  21. We’re only not in deflation now because of thevery QE that two beers wants us to abandon, same with last year. QE (all three variations) is the only thing that has kept us from repeating Japan’s last two decades.

  22. holy crap, anon, Japan’s two decades of heavy and extended use of QE was the model for Bernanke.
    The bankers must be saved no matter the expense to the real economy!

  23. QE is a term that refers to additional monetary policy attempts to stimulate the economy after standard/traditional monetary has already taken short term rates to zero/near zero. The measures that Japan took to combat deflation after they were already at zero interest rates are commonly referred to as QE, but they are different from the steps the Fed took here that are also referred to as QE.

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