Mortgage rates fall for the week of May 26, 2014

Posted by  on Jun 02, 2014

You won't have noticed the new byline, but for the last few weeks a new writer has been filling this space. And by now, you might think that he should be getting bored: He's so far only written headlines beginning "Mortgage rates fall for the week of…" But, of course, delivering good news is never boring. And even tiny changes in home loan rates can make a big difference.

For example, those who locked in their rates for 30-year fixed-rate mortgages (FRMs) at the start of January on average paid 4.64 percent. Last week, that same rate was 4.19 percent, with the same 0.13 points. That sounds a small difference, but it's enough to lower the lifetime cost of a $200,000 home loan by $19,155, according to ShopRate.com's mortgage calculators. If interest rates dip much lower, January buyers might soon be looking to refinance.

Nerves of steel?

The problem is, there are signs that trend might not last. That 4.19-percent figure came from HSH.com's Mortgage Rates Radar weekly survey, which measures from each Wednesday to the following Tuesday. But, by Monday, June 2, the 30-year FRM rate had drifted up to 4.22 percent. Does this mean that the rates trend has -- after five straight weeks of falls -- reversed? Honestly, nobody knows for sure.

However, plenty of experts seem confident that today's very low interest costs are going to be short-lived. On Friday, Moody's Analytics chief economist Mark Zandi told Bloomberg, "It's a temporary window of opportunity for buyers in that a year from now rates will be higher… But I wouldn't count on these low rates for very long."

Of course, Zandi wasn't saying that it's going to take a year for rates to rise, merely that it was a near certainty they would be significantly higher in 12 months. Indeed, his own company, Fannie Mae and the Mortgage Bankers Association are all forecasting rates of between 4.5 percent and 5.0 percent by the end of this year. Only you can decide whether you're willing to gamble on rates dipping slightly again before they begin their seemingly inevitable long-term rise.

Best mortgage rates: averages in detail

During the week ending May 27, measured by Mortgage Rates Radar, the average for 5/1 hybrid adjustable-rate mortgages (ARMs) sat at 3.07 percent. During the later seven days ending Friday, those for 15-year FRMs averaged 3.40 percent (their lowest for more than a year) with points at 0.09, while those for 1/1 30-year ARMs were 2.72 percent with 0.13 points. Don't forget: Our live database of current mortgage rates can help you find the best mortgage rates in your area.

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