Mortgage rates fall for the week of July 14, 2014

Posted by  on Jul 21, 2014

Mortgage rates are like those magnificent men in their flying machines: They go up, tiddly, up, up. They go down, diddly, down, down. And all these apparent economic aerobatics can make it feel as if we're going through a time of great rate volatility.

However, in reality, the opposite is the case. Check out the trend graph on the Knowledge Center page, and you should see that the variations across all the reported rates are tiny: a maximum of just 20 basis points (0.2 percent) separates the highest from the lowest over the last three months, and the spread over the last six months isn't much bigger. You can also change the span from six months to three years to study the range of rates over a longer period.

Home price inflation a key factor

Of course, nobody knows what's going to happen to mortgage rates in the future. But if you're waiting to make your application until they dip significantly lower (a strategy some would regard as wildly optimistic), you may be hanging around for a very long time. Meanwhile, another factor could be eroding any gains you might make if such a lower rate does eventually materialize -- home price inflation.

On July 1, CoreLogic unveiled its nationwide home price data for the year ending May 2014. And these showed an average rise of 8.8 percent. Of course, prices in different areas move to dramatically different extents, but it is important to build changes into your calculations. It's easy to research online your local trends, and then to model different price and rate scenarios using a mortgage calculator.

This week's rates for home loans

According to data compiled by HSH.com, average national rates for the most popular type of home loan, the 30-year fixed-rate mortgage (FRM), edged down this week to 4.21 percent from 4.24 percent. Points also declined to 0.14 from 0.17. Meanwhile, those for 15-year FRMs also fell, to 3.43 percent from 3.47 percent, with points down to 0.09 from 0.11. Adjustable-rate mortgages (ARMs) generally followed the trend, with those for 1/1 30-year ARMs dipping to 2.85 percent from 2.92 percent. However, points for these leapt upwards -- to an eye-watering 0.29 from 0.11 the week before.

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