Mortgage rates have fallen to their lowest point for the year.
The benchmark 30-year fixed-rate mortgage fell 5 basis points over the past week, to an average of 5.07%, according to the Bankrate.com national survey of large lenders. (A basis point is one-hundredth of a percentage point.) That ties the 2010 low from the March 17 survey.
The mortgages in the latest survey had an average total of 0.42 discount and origination points. One year ago, the mortgage index was 5.21%; it was also 5.21% four weeks ago.
The benchmark 15-year fixed-rate mortgage slipped 4 basis points, to an average of 4.45%. The benchmark 5/1 adjustable-rate mortgage also dropped 4 basis points, to 4.27%.
Invisible fall
But if mortgage rates tumble across America and nobody sees the drop, does it really happen?When the stock market suddenly plunged nearly 1,000 points in a few minutes May 6, mortgage rates also collapsed. By some accounts, rates fell to about 4.5% on the 30-year fixed and below 4% for some adjustable-rate mortgages.
But mortgage professionals say the rock-bottom borrowing costs didn't last long and went largely unnoticed by the public.
"I think it kinda sailed over everyone's heads because everyone was hypnotized by the crash in the stock market," says Jeff Lazerson, the president of Mortgage Grader in Laguna Niguel, Calif.
Chris Sipe, a senior loan officer at Embrace Home Loans in Frederick, Md., says that when rates fell, he experienced a "little pop" in refinance activity -- but mostly because he called clients to alert them to the unexpected opportunity.
"Most people didn't even understand what happened or the impact until rates had already begun to move off their lows," Sipe says.
| 30-year fixed | 15-year fixed | 5-year ARM | |
|---|---|---|---|
Average rate | 5.07% | 4.45% | 4.27% |
Change from a week ago | -0.05 | -0.04 | -0.04 |
Average monthly payment | $892.83 | $1,258.03 | $813.63 |
Change from a week ago | -$5.07 | -$3.37 | -$3.88 |
*Survey of large lenders and the effect on monthly payments for a $165,000 loan |
Post-tax credit progress report
Nearly two weeks after the homebuyer tax credit expired, what is the state of housing activity across the nation?Surprisingly good, according to Jim Sahnger, a mortgage consultant at Palm Beach Financial Network in Stuart, Fla.
"People still recognize that the combination of great rates and lower home prices represent a great opportunity," Sahnger says.
Lazerson says activity is "on fire" in his California community, particularly on lower-end properties.
"The sales activity -- at least in my part of the country -- is pretty brisk except on the very high end, except well over a million dollars," he says.
Sipe says Maryland shoppers who failed to find a home in time to qualify for the tax credit nonetheless remain "in the market" for now. But he frets that a combination of widespread foreclosures, rising mortgage rates and stricter lending guidelines still could derail sales activity.
'A mature industry past its peak'
Brian Peart's worries run even deeper. The president of Nexus Financial in Atlanta says people are underestimating both the depth of the foreclosure crisis and just how dependent the economy's health has become on continued government stimulus. As a result, housing in many communities has a long road to recovery ahead of it, he says."I talk to a lot of people in Florida, for example, (who) think the market has turned and soon we will see prices go back to normal -- 'normal' to them being the market top in 2006-2007," he says. "Prices in Florida will not get back there for 20 years, but people don't see that."
In fact, Peart believes that "housing has become a mature industry past its peak." He still sees the opportunity to find good deals, but says a lot of people who buy today and expect "rapid returns and appreciation will be disappointed, in my opinion."
"I still would rather own than rent. I love my own house, and my family has great memories there and are still making great memories," he says. "But if I were to sell it today, I could only move it if I price it like it was when I bought it in 1998. That is just a market reality."
This article was reported by Chris Kissell for Bankrate.com.
