Mortgage rates fall for the week of August 11, 2014

Posted by  on Aug 18, 2014

There are times when mortgage rates are volatile. If you wanted to drive across terrain that resembled a graph of their fluctuations, you'd need a rugged off-road SUV. It's been quite a while since the home loans market was that exciting. For months now, you could drive along that graph with a full coffee cup in an old car with shot suspension -- and you wouldn't spill a drop.

Mortgage rates this week

Look at fixed rate mortgages (FRMs) this week. Average rates for the most popular forms of these (30- and 15-year loans) fell by just two basis points (0.02 percent) to 4.21 percent and 3.46 percent respectively, according to HSH.com. Points for these were similarly sluggish, moving up by just 0.01 to 0.14 and 0.12, again respectively.

As is often the case, average rates for some adjustable-rate mortgages (ARMs) traveled in the opposite direction. That for 1/1 30-year ARMs moved up to 2.75 percent from 2.71 percent, taking it back to to where it was in the last full week in June. The only excitement over the last seven days came from that product's points, which shot up to 0.22 from 0.13.

This lack of volatility is reassuring for those who are taking a wait-and-see attitude to buying a home or refinancing. If you model the graphs on this site's Trends page, it's unlikely that waiting has, over the last six months or so, cost you (or saved you) anything much in terms of rates, though any home-price rises in your area could have hurt you financially.

Future trends in home loans

However, the remark of one expert, quoted this week in National Mortgage Professional Magazine, might bother you. Grant Stern, president of Florida-based Morningside Mortgage Corporation, discussed with a reporter the forthcoming "inevitable rate rise," and remarked, "When rates first go up, we will see a big wave of activity. All of the people sitting on the fence will jump off, one way or the other."

One way or the other! Presumably that means that lots of procrastinators are all going to try to act together, which could itself push up rates. But it must surely also mean that lots are going jump off on the other side: are going to be forced to give up altogether on buying a home or refinancing. And that represents a whole pile of broken dreams.

The fact is, there's no such thing as a normal mortgage rate, and recent flat graphs are no guarantee of future ones. Obviously, nobody knows when "the inevitable rate rise" is going to come -- or even whether it's truly inevitable, though that seems highly likely. But carrying on waiting and seeing for much longer might easily turn out to be a mistake.

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