Most types of popular mortgage products saw their rates decline in HSH.com’s Weekly Mortgage Rates Radar for the week ended Tuesday, February 3, 2015.
Mortgage rates have been moving on a downward path since the latter part of 2014, and are now substantially lower than their year-ago figures. 30-year fixed-rate mortgages, in particular, have seen a notable decline, and were down by three basis points from 3.74 percent to 3.71 percent. This came just one week after rates had gone the other way and risen from 3.71 percent to 3.74 percent. Conforming 5/1 hybrid adjustable-rate mortgages, which is the only other type mortgage regularly covered by HSH as of now, held steady, stalling at 3.01 percent as of Tuesday.
Statements from HSH’s vice president Keith Gumbinger suggest that the current trend of low, sub-4 percent mortgage rates may end one day, but probably would not end in the near future, due to variables such as inflation and gross domestic product growth.
“The Federal Reserve believes that the economy is strong, and appears to be continuing on a path that will bring a lift in short-term interest rates by mid-year,” he said. “However, given soft inflation readings and slower growth in place at the moment, it’s not clear that the market is convinced that a move is coming quite that soon.” GDP growth in the December 2014 quarter had decelerated, slipping to a growth rate of 2.6 percent, from a 5 percent rise in the September 2014 frame.
HSH, through Gumbinger, also noted that the U.S. Federal Reserve may not make any moves regarding interest rate hikes, considering the albatrosses keeping economic growth and inflation further away from the Fed’s targets. Gumbinger also said that the Fed’s first rate hike in years may turn out to be a small one, but not the last one the central bank will be making.
“The actual Fed change to short-term rates will probably prove inconsequential to long-term mortgage rates when it comes, as mortgage rates will probably already have nudged higher before then,” Gumbinger also stated. “For fixed-rate mortgages, it’s often been the case that the market moves first, reacting more quickly to the same factors the Fed sees, as investors have no six-week lag between meetings before decisions are made.”
Language from the Fed’s most recent minutes of the meeting show no signs that it is planning to increase overnight rates anytime soon, though most experts believe this would take place by mid-2015 at the very earliest, and possibly closer to the end of the year.
HSH’s Weekly Mortgage Rates Radar, as per the company’s standard press releases, is a report covering the average rates and points on both 30-year fixed-rate mortgages and 5/1 ARMs, both with conforming balances of $417,000 or less; 15-year FRMs, which were once covered on the Mortgage Rates Radar, are no longer reported on a weekly basis. HSH uses a wraparound week from Wednesday to Tuesday, and releases its data every Wednesday, and says that the rates it quotes help “consumers find the best rates on home loans in changing market conditions.”