Mortgage rates fall for week of May 12, 2014

Posted by  on May 19, 2014

Average rates for conforming 30-year fixed-rate mortgages (FRMs) slipped lower again last week according to a number of monitoring services. They reached a six-month low across the seven days and, by the end of the week, were at their best for 11 months.

Mortgage rates in detail

HSH.com's weekly Mortgage Rates Radar service, which measures from Wednesdays to Tuesdays, found an average of 4.27 percent with points of 0.13 for these 30-year FRMs over the latest period. However, by week's end, that had dipped further, to 4.19 percent. If this trend continues, we could soon see sub-4 percent rates again -- for the first time since the end of May 2013.

The same source showed other rates also drifting down. Those for 15-year FRMs averaged 3.47 percent with 0.11 points between May 7 and 14, another six-month low. The same figure for 1/1 30-year adjustable-rate mortgages (ARMs) was just 2.81 percent, also with points of 0.11. Our live database of current mortgage rates can help you find the best mortgage rates in your area.

Refinances regaining popularity

These recent lows are tempting more people to refinance, with the Mortgage Bankers Association (MBA) reporting that fully one half of all applications made during week ending May 9 were for this purpose. You can see why this might be happening. As home prices rise (they were up 11.1 percent in March compared with the same month in 2013, according to the CoreLogic Home Price Index), many people who would have found it difficult to secure a mortgage refinance because their homes were under water are finally able to get their applications approved.

Freddie Mac vice president and chief economist Frank Nothaft sees today's low home loan rates as benefiting sellers, buyers and those refinancing alike: "These lower than expected rates are welcome news with the spring home buying season underway and may even provide those who haven't already refinanced possibly a reason to take another look."

Less positive trend

Of course, nothing's ever perfect, and one piece of more worrying news emerged earlier this month. The MBA has found that mortgage credit availability (the amount of money made available by lenders for home loans) fell slightly in April. MBA chief economist Mike Fratantoni explained, "Some investors shut down or tightened criteria for certain programs."

This dip only applies to certain types of loans, and has so far occurred in only a single month. So it's far too soon to predict a genuine credit squeeze that could seriously affect mortgage availability. But if you want to buy a home or refinance anytime soon, you might want to check which lenders may be offering the best mortgage rates available now.

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