By Mike Colpitts
Mortgage rates are at near record lows again for the first time since last October when rates hit an all-time record low, but the lower rates seem to be doing little other than driving some homeowners to refinance their mortgages.
Built up anxiety over troubles with the U. S. economy, consumer debt that reached record levels before coming down, much of its because of massive foreclosures and weakness in the job market are contributing to the slowdown in what otherwise may be a spike in home sales.
The Mortgage Bankers Association said that a spike in mortgage applications last week was driven by refinancing, but saw little improvement in home and other residential sales. Consumer credit has increased in the last two quarters along with lines of home equity, but much of it is associated with desperate moves by consumers to pay bills in these tough financial times.
U.S. Treasury rates hitting new lows triggered the fall in mortgage interest rates, a reverse of what most financial analysts believed would develop last week. The benchmark 10-year Treasury bond hit 2.08% before rising after Standard and Poor’s downgraded the nation’s credit standing.
The drop in the fixed 30-year mortgage hit an average low of 4.32% last Thursday, according to the Freddie Mac weekly survey. But rates on conventional mortgages, including the 30-year loan and adjustable rate mortgages are much lower at many lenders and could move even lower as uncertainty over the U.S. economy lingers.
Mortgage rates typically change several times a day during especially turbulent economic periods like the present financial movement exhibits on Wall Street as financial markets go up and down erratically. Banks and mortgage lenders change rates several times during the day in order to generate more business activity.
Consumers shopping for the best mortgage interest rates may have to lock-in rates quickly in order to take advantage of the lowest rates available. A 30-year fixed rate mortgage available at 4.02% with 1 point may rise within just minutes in the current volatile economic environment. Rates were that low at times on Monday and may reach those levels or even lower again.
The fixed rate 15-year mortgage hit 3.4% for a time, before moving higher. Rates are often lower in the morning when they are first set by lenders than later in the day.