Florida Mortgage Rates Finally Fall
As we’ve previously documented, mortgage rates have been rising for 11 consecutive weeks. If last week is any indication, however, this trend may finally be over. Why is this the case? Because 30-year fixed interest rates fell for the first time since August. A mixed bag of economic data, including a slowdown in housing starts, led to the decrease.
The benchmark 30-year, fixed-rate mortgage fell 10 basis points to 6.32%, according to the Bankrate.com national survey of large lenders. A basis point is one-hundredth of 1 percentage point. The mortgages in this week’s survey had an average total of 0.35 discount and origination points.
One year ago, the mortgage index was 5.72% - four weeks ago it stood at 6.24%.
Meanwhile, the benchmark 15-year, fixed-rate mortgage fell 11 basis points to 5.88%. Also, the benchmark 5/1 adjustable-rate mortgage fell 8 basis points, to 5.85%.
“Lower oil prices — at least compared to the last several months — have helped to alleviate some of the inflation fears that the market has been experiencing lately,” says Frank Nothaft, chief economist for Freddie Mac. “That helped to reduce upward pressure on interest rates last week, allowing mortgage rates to ease a bit.”
A cooler housing market
The bulk of this week’s rate decline happened late last week, after the Census Bureau reported that housing starts slowed to an annual pace of 2.01 million in October, down from September’s pace of 2.13 million. Starts were down 2.3% from the previous year.
To keep things in perspective, any time housing starts are at an annual pace of 2 million or more, it’s a sign of a healthy home-building market. October’s new housing market wasn’t as hot as expected, but it was still quite robust nevertheless. Interest rates and the costs of building materials have been rising post-Katrina, making homes less affordable, so it’s no surprise that housing starts have fallen a bit.
Another economic report, one that measures business activity in the Federal Reserve’s Philadelphia district, showed an unexpectedly large drop, as well. Lower oil prices, plus evidence of a cooling economy, led to lower yields on U.S. Treasury notes as well as lower rates on mortgages.
Refi applications decrease
Other numbers showed that fewer people applied to refinance home loans around the country, according to the Mortgage Bankers Association. The group’s seasonally adjusted refinance index was down 6.9%from the previous week, and the four-week moving average for refinance applications was down 4.6%. In other words, more people were applying to refinance when rates were rising from 6.24 percent to 6.42 percent than when rates were falling during the last week. It’s important to note that if you’re dissatisfied with your Florida home loan, NOW would be a very good time to refinance as rates have dropped slightly.
Those who applied for a Florida home loan last month, but didn’t lock in the rate, could benefit if numbers continue to fall. This process always takes guess work, but with luck you can secure rates as they hit the bottom of the dip.
