By Mike Colpitts
Mortgage rates declined to an average of 4.81% for the week with 0.7 point down from 4.83% a week ago, according to Freddie Mac. The dip represents the first decline in more than a month after rates hit their record low in late October.
The 30-year fixed rate mortgage is expected to remain under 5% during 2011 by Freddie Mac economists. The 15-year fixed rate mortgage also dropped .02% for the week to an average of 4.15% with 0.7 point down from 4.17% the prior week.
Applications for home mortgages also took a steep drop last week, according to the Mortgage Bankers Association, demonstrating on-going market weakness. The Market Composite Index, a measure of mortgage loan applications, decreased 18.6% on a seasonally adjusted basis from one week ago.
The Refinance Index dropped 24.6% from the previous week. The Refinance Index has declined six straight weeks and is at its lowest level since late April. The seasonally adjusted Purchase Index decreased 2.5% from one week earlier. “Refinance application volume dropped sharply this week as mortgage rates held near six month highs,” said Michael Fratantoni, MBA’s Vice President of Research and Economics. “Purchase applications fell for a second week.”
Low mortgage rates are a vital factor to keep home sales and other property sales moving. The median price of a home rose a slight 1.2% in November over a year ago, despite the prices on most homes that are being sold declining.
The 5-year Treasury indexed adjustable rate mortgage averaged 3.75% for the week with 0.6 point from 3.77% the previous week, according to Freddie Mac.