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Mortgage Rates Radar: A small decline for mortgage rates

HSH.com

Rates on the most popular types of mortgages edged lower, according to HSH.com's Weekly Mortgage Rates Radar. The average rate for conforming 30-year fixed-rate mortgages fell by three basis points (0.03 percent) to 4.50 percent. Conforming 5/1 Hybrid ARM rates decreased by a single basis point, closing the Wednesday-to-Tuesday wraparound weekly survey at an average of 3.25 percent.

Mortgage rates have settled

"Mortgage rates have settled over the last few days, as we're in-between market-moving events," said HSH.com vice president Keith Gumbinger. "The soft December employment report is behind us; the next Fed meeting, where we may or may not get another cut in Treasury and MBS purchases is coming up. Investors are watching the incoming data closely for signals that the Fed will or won't make a move, so interest rates are holding fairly steady at the moment."

Will the Fed trim QE again?

The Federal Reserve trimmed QE purchases by $10 billion at its December meeting, and outgoing Fed Chairman Ben Bernanke left a strong impression that the Fed would like to reduce purchases of MBS and Treasuries at a like amount over the next seven Fed meetings.

However, the Fed has noted that the decision to do so is dependent upon whether the economy is performing satisfactorily, that the risks to inflation aren't rising, and perhaps most important, that the program is still having the desired impact. With interest rates already well off their bottoms, it just may be that the program is no longer generating the economic heat that it once was, and there may not be much additional upward impact on mortgage rates if the taper continues at a measured pace.

Is QE still necessary?

"The Fed's QE program certainly provided key and needed support for the housing markets, fostering sales, firming prices and reducing the number of underwater homeowners," adds Gumbinger. "However, the economy may no longer need as much of this unusual support. Aside from refinancing, the housing market has done fairly well in the last half of 2013, even with mortgage rates a full percentage point or more above last May's lows."

Current mortgage rates

Average mortgage rates and points for conforming residential mortgages for the week ending January 21, according to HSH.com:

HSH.com Mortgage Rates Radar - Four Week Trend

Conforming 30-year fixed-rate mortgage

  • Average rate:   4.50 percent
  • Average points: 0.21

Conforming 5/1-year adjustable-rate mortgage

  • Average rate:   3.25 percent
  • Average points: 0.11

Average mortgage rates and points for conforming residential mortgages for the previous week ending January 14 were, according to HSH.com:

Conforming 30-year fixed-rate mortgage

  • Average Rate:   4.53 percent
  • Average Points: 0.18

Conforming 5/1-year adjustable-rate mortgage

  • Average Rate:   3.26 percent
  • Average Points: 0.13

Methodology

The Weekly Mortgage Rates Radar reports the average rates and points offered on conforming 30-year fixed-rate mortgages and conforming 5/1 ARMs. The weekly mortgage rate survey covers a large sample of mortgage lenders and is conducted over a Wednesday-to-Tuesday cycle, with data released every Wednesday. HSH.com’s survey helps consumers find the best rates on home loans in changing market conditions. Unlike mortgage rate surveys that report average rates only, the Weekly Mortgage Rates Radar’s inclusion of both average rates and average points provides a more accurate view of mortgage terms currently offered by lenders.

Every week, HSH.com conducts a survey of mortgage rate data for a wide range of consumer mortgage products including ARMs, FHA-backed and jumbo mortgages, as well as home equity loans and lines of credit from hundreds of direct lenders in the U.S. For information on additional loan products, visit HSH.com.

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