Fixed mortgage rates end year just under 4 percent
Diane Alter – AHN News Reporter
Washington DC, United States (AHN) – Average fixed mortgage rates in the United States end 2011 near all-time record lows. The 30-year fixed home loan exits the year at 3.95 percent.
According to Freddie Mac, the rate for a 30-year fixed rate mortgage has stayed at or below 4 percent for nine consecutive weeks. It averaged above 5 percent just twice in 2011.
For the week ending Dec. 29, the 30-year fixed mortgage averaged 3.95 percent, up from 3.91 percent the prior week, and below 4.86 percent in the same period a year ago.
Rates on 15-year fixed mortgages averaged 3.24 percent, up from last week’s 3.21 percent, and below 4.20 percent a year ago.
Mortgage rates hit historic lows in 2011, but did little to help the ailing housing market, which is set to close out 2011 as the worst on record for new home sales.
Tight credit, stringent credit standards, and uncertainty about the economy kept many Americans from taking advantage of the never before seen, record low, mortgage rates.
Activity Up Despite Rising Rates
The Mortech-Mortgage Daily Mortgage Market Index for the week ended Dec. 18 rose to 260 from 188 a week earlier. The conventional 30-year fixed-rate mortgage averaged 4.68 percent this week, climbing from 4.51 percent. Although mortgage rates jumped, refinance activity picked up.
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Bad Week for Mortgage Market
New mortgage activity was down 6 percent, based on the Mortech-Mortgage Daily Mortgage Market Index for the week ended Nov. 17. The decline in activity was tied to a drop in refinances, with total refinance share falling. Meanwhile, the conventional 30-year fixed-rate mortgage surged 23 basis points from a week earlier.
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Record Low Rates Drive Increase in Business
The average 30-year fixed-rate mortgage fell 7 basis points in Freddie Mac’ most recent survey. It was the lowest level on record for the 30 year. In an apparent response to the new lows, mortgage activity was 8 percent higher based on the latest Mortech-Mortgage Daily Mortgage Market Index report.
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Activity Improves as Rates Retreat
The Mortech-Mortgage Daily Mortgage Market Index for the week ended Oct. 6 was 297, strengthening from 284 the prior Wednesday. Refinances were behind the increase, with refinance share edging up to 59 percent from 58 percent one week earlier. The conventional 30-year fixed-rate mortgage slipped 3 basis points to 4.256 percent this week.
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High Cost Loan Limits Extended
The U.S. Senate and House of Representatives passed legislation that extends the current conforming loan limits through the new fiscal year. High-cost loan limits as high as $729,750 were set to expire Sept. 30 — the end of the government’s fiscal year. “Extending the existing limits is essential to helping borrowers continue to have access to affordable long-term, fixed-rate mortgage credit in today’s struggling economy,” the chairman of the Mortgage Bankers Association Chairman said in a news release.
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Understanding Real Estate Mortgage Loans
photo credit: VisitMyLuxuryHome.com
Introduction
Mortgages are loans that are used to purchase real estate and come in many different forms. The most common types are Conventional, FHA and VA. Other types are Second, Reverse and Balloon Mortgages. These loans often involve the use of Discount Points.
Conventional
The conventional loan is the most common type of mortgage used in the nation today. Conventional mortgages are loans between borrowers and lenders that are not insured or guaranteed by the government. Conventional mortgages are either privately insured through private mortgage insurance companies or not insured at all. Conventional loan guidelines typically require a minimum down payment of five percent on owner-occupied (non-rental) properties; higher for investment/rental properties. For mortgages that have a down payment of less than 20%, private mortgage insurance (PMI) is usually required. Most conventional mortgages have time frames of 15 to 30 years and may be either fixed-rate or adjustable. Read more
