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Mortgage Rates Radar: Mortgage rates moving sideways as new rules kick in this week

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Rates on the most popular types of mortgages hardly moved this week, according to HSH.com's Weekly Mortgage Rates Radar. The average rate for conforming 30-year fixed mortgage rates stayed the same at 4.61 percent. Conforming 5/1 Hybrid ARM rates increased by just three basis points, closing the Wednesday-to-Tuesday wraparound weekly survey at an average of 3.33 percent.

Mortgage rates remain firm

"Mortgage rates have been steady to slightly firmer in recent weeks but remain in familiar territory," said Keith Gumbinger, vice president of HSH.com. "The warmer economy and less-aggressive Federal Reserve are keeping rates pretty firm at the moment. However, there are issues besides interest rates which will affect homebuyers and refinancers as we enter 2014, and those come into play starting this Friday."

New rules go into effect

Rules written under Dodd-Frank to address problems revealed in the financial market collapse of several years ago take effect on January 10. These changes include the new Ability to Repay (ATR) and Qualified Mortgage (QM) rules. Given the tight underwriting standards already in place in the market, they may not do much to further restrict credit availability, but don't do much to enhance it either.

"Lenders have been deeply scrutinizing borrower applications for several years, requiring plenty of documentation and doing their best to make certain that borrowers can afford the loan for which they've applied," added Gumbinger. "Until Friday, that's been a kind of market-enforced discipline, and the implementation of ATR is more of a formalization, so it shouldn't disturb things too much, except perhaps slowing down the application-to-closing process somewhat."

QM could raise rates, tighten credit

Gumbinger added, "The QM rule, which puts into place certain strictures, such as a maximum debt-to-income ratio, fee limits and other items, may see some borrowers with a lessened availability of credit, higher rates or both, as lenders look across their markets and try to determine whether they are willing to make mortgages which may expose them to greater risks of loss or liability in the future."

Current mortgage rates

Average mortgage rates and points for conforming residential mortgages for the week ending January 7, according to HSH.com:

HSH.com Mortgage Rates Radar - Four Week Trend

Conforming 30-year fixed-rate mortgage

  • Average rate:   4.61 percent
  • Average points: 0.19

Conforming 5/1-year adjustable-rate mortgage

  • Average rate:   3.33 percent
  • Average points: 0.11

Average mortgage rates and points for conforming residential mortgages for the previous week ending December 30 were, according to HSH.com:

Conforming 30-year fixed-rate mortgage

  • Average Rate:   4.61 percent
  • Average Points: 0.16

Conforming 5/1-year adjustable-rate mortgage

  • Average Rate:   3.30 percent
  • Average Points: 0.10

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.

About the author:

KTGA 25-year expert observer of the mortgage and consumer debt markets, Keith Gumbinger has been cited in thousands of articles covering a wide range of consumer finance and economic topics in outlets ranging from the Wall Street Journal to the Bottom Line newsletters. He has been a featured guest on national broadcasts for CNN, CNBC, ABC, CBS and NBC television networks and has been heard on NPR and other national and local radio programs. Keith is the primary researcher and writer for HSH.com's MarketTrends newsletter and has authored or co-authored a number of consumer guides on mortgages, home equity, refinancing and more.

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