Mortgage rates fall for the week of August 18, 2014

Posted by  on Aug 25, 2014

It's been another favorable week for the American economy, with house prices and new housing starts looking good, and other indicators better than expected. Normally, that would tend to push up interest rates, but continuing geopolitical worries are driving investors back to these shores, which they regard as a safe haven, increasing the supply of available cash for mortgage borrowing. So the law of supply and demand has kicked in, pushing most mortgage rates down.

Mortgage rates in numbers

The week's changes were relatively small, just as they have been for many months, but have been enough to push the average for 30-year fixed rate mortgages (FRMs) to its lowest level in more than 14 months, according to HSH.com. By Friday, it stood at 4.16 percent, down five basis points on the previous week when it was 4.21 percent. Points for these, however, moved up to 0.18 from 0.14.

The average rate for 15-year FRMs fell a little less far, to 3.43 percent (where it sat four weeks ago) from 3.46 percent, with points edging down from 0.12 to 0.11. For 30-year 1/1 adjustable-rate mortgages, the average stood at 2.74 percent, just one basis point down from 2.75 percent during the previous seven days. Points for these, often more volatile than for other products, tumbled to 0.16 from 0.22.

Our live database of current mortgage rates can help you find the best mortgage rates in your area.

Refinance rates rule

As you might expect, these low numbers are tempting wait-and-see fence-sitters to jump into action, especially on their refinance plans. The Mortgage Bankers Association reported Wednesday that, during the week ending August 15, refinances made up 55 percent of all mortgage applications, an increase on the previous week. That proportion may turn out to be even higher when last week's figures -- with its yet lower refinance rates -- are released.

If you are thinking of refinancing, timing is everything. But that's not just a question of acting when rates are low. Of course, you have to strike when it's most financially advantageous to do so, but to determine that you need also to keep your eye on your credit score, the equity you have in your home and property prices in your neighborhood. And, when all those are set fair, you'll have to decide on the length of the home loan that's going to best enhance your financial -- and, depending on your situation, retirement -- plans.

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