New Record Low Mortgage Rates Not Enough to Keep Applications Up
Nov 23rd, 2012 @ 9:56 AM by Amber Nelson
Mortgage interest rates fell to a new all-time low this past week, according to mortgage finance company Freddie Mac, but the Mortgage Bankers Association reported a decrease in demand for mortgage applications at the same time.
The average rate on a 30-year fixed rate mortgage fell to 3.31 percent, excluding points, the second week in a row of record-breaking lows. Last week the new record low was 3.34 percent, and one year ago the average rate was 3.98 percent.
The 15-year fixed rate mortgage also found a new low for the second straight week. It is now down to 2.63 percent from 2.65 percent last week and 3.30 percent from the previous year.
Freddie Mac is optimistic that these rock-bottom rates will translate into housing market gains.
“Fixed mortgage rates continued to ease somewhat this week to record lows and should help the ongoing housing recovery,” said Freddie Mac vice president and chief economist Frank Nothaft in a press release. “Already, new construction on homes was up 3.6 percent in October to the strongest pace since July 2008. In November, homebuilder confidence rose for the sixth straight month to its highest reading since June 2006 according to the NAHB/Wells Fargo Housing Market Index. And existing home sales increased 2.1 percent in October to an annualized pace of 4.79 million, exceeding the market consensus forecast.”
However, mortgage applications have fallen during six out of the past seven weeks, according to data from the MBA. After a slight increased last week, the MBA’s Market Composite Index, a measure of total loan application volume, fell 2.2 percent this week. Both refinance applications and home purchase loans requests were down 3 percent and were down 6 percent from the year before. The holiday season is notoriously slow in the mortgage world, though, and a spur in activity from the low rates could kick in after New Year’s.
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.