Florida Home Rates Decline Slightly; Experts See Quarter-Point Rise By End Of 2006
Reuters reports that 30-year fixed rate mortgages have falled to an average of 6.24 percent nationally, down from 6.26 percent the previous week. The figures were calculated through a survey released by Freddie Mac on Thursday. A year ago, 30-year mortgages averaged 5.79 percent, and were low for most of 2005 before rising above 6.30 percent in November. The rates have been up and down since.
Rates on 15-year mortgages, meanwhile, averaged 5.89 percent, unchanged from last week. One-year adjustable rate mortgages rose slightly, finishing the week at an average of 5.34 percent, up from from 5.32 percent. A year ago, 15-year mortgages were at 5.33 percent and the one-year ARM at 4.14 percent. Signs of a cooling housing market are everywhere.
“The level of interest rates has slowed home sales in recent months, even though house prices still grew at a double-digit annualized pace during the final quarter of 2005, according to Freddie Mac’s Conventional Mortgage Home Price Index (CMHPI),” Frank Nothaft, Freddie Mac vice president and chief economist, said.
On Monday, the Commerce Department reported that sales of new homes fell 5 percent in January, and on Tuesday the National Association of Realtors said sales of existing homes dropped 2.8 percent in January to a 6.56 million unit rate, the lowest level in two years. Along the same lines, the Mortgage Bankers Association said on Wednesday its index of U.S. applications for home loans dropped by 1.2 percent in the week ending Feb. 24.
“Since the average time homes are on the market is near a three-year high, house price growth should slow to single-digit figures, which is consistent with historical periods,” Nothaft added.
Lenders charged an average of 0.6 percent in origination fees (also called points) on 30- and 15-year mortgages, the same as last week. They charged 0.8 percent on the one-year ARM, up from 0.7 percent. The 5/1 hybrid ARM, a loan set at a fixed rate for five years, then adjusting each year following, averaged 5.97 percent, up slightly from 5.96 percent last week, and up from 5.17 percent a year earlier, according to the survey.
Where do experts see rates heading from here?
“Over the past five weeks, mortgage rates remained within a narrow range of 0.1 percentage point around this week’s averages. Our forecast calls for rates on 30-year fixed-rate mortgages to increase about one-quarter of a percentage point by the end of the year,” Nothaft said.
This drop in Florida home loan rates comes on the heels of another last week — Bankrate.com, another financial authority, pegged the average rate at 6.34 a week ago. Considering how low the current rates are historically (see chart below), it’s amazing how rapidly Miami real estate sales have cooled off. Unfortunately, less demand and rising inventory hasn’t been enough to bring prices back down to earth. Yet.
