Amid mixed housing market and economic reports, mortgage rates continue to hover around 60-year lows, Freddie Mac reports.
For the second consecutive week, the Primary Mortgage Market Survey has remained stable. The rate for a 30-year fixed-rate mortgage averaged 4.1 percent, slightly lower from the week before when it averaged 4.11 percent. This rate continues to prove more affordable than a year ago, when the 30-year FRM averaged 4.23 percent.
Similarly, the average rate for a 15-year fixed-rate mortgage remained stable near its historic low of 3.38 percent. However, this rate is significantly less than a year ago when it averaged 3.66 percent.
Yet fixed-rate mortgages weren't the only averages that saw changes. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.08 percent. This is a significant increase from the prior week when it averaged 3.01 percent. Despite the spike, the average rate for a 5-year ARM remains much lower than a year ago when it was 3.41 percent. However, not all adjustable-rate mortgages saw increases. The average rate for a 1-year Treasury-indexed ARM fell .04 percent, settling at 2.9 percent. During the same week in 2010, the average was 3.3 percent.
"Fixed mortgage rates followed other long-term interest rates and showed little change, on average, from the prior week," said vice president and chief economist at Freddie Mac, Frank Nothaft. "The latest monthly housing market indicators were mixed, with consumer confidence soft, house prices largely flat, and new home sales up from very low levels."
However, the instability in consumer confidence had a minor effect on mortgage rates. While consumer sentiment improved in September, it declined in October, reported The Conference Board in its Consumer Confidence Index. The index now stands at 39.8, a noticeable decline from September when it edged higher to 46.4.
"Consumer confidence is now back to levels last seen during the 2008-2009 recession," said Lynn Franco, director of The Conference Board Consumer Research Center.
The hit taken to the Consumer Confidence Index can be felt in the housing market. The National Association of Realtors reported a decline in pending home sales in September, but rates still remains higher than levels seen in September 2010.
The Pending Home Sales Index, based on levels of contract signings, fell 4.6 percent in September to 84.5 from 88.6 in August. However, this rate still remains higher than August when it measured 79.4.
"A combination of weak consumer confidence and continuing tight lending criteria held back home buyers," said NAR chief economist Lawrence Yun, emphasizing a need to reinstate a higher conforming loan limit.
Regionally, pending home sales declined by 4.7 percent in the Northeast, while dropping 6.2 percent in the Midwest. Meanwhile, the South saw prices dip 5.5 percent, while the West's property values declined the least, dropping 2.2 percent.
Even as mortgage rates are stable near historic lows and home prices continue to fall, buyers fail to be enticed, reports The Street, a New York-based news source. These trends continue to highlight the troubling trend that Americans are afraid to invest in homes amid a shaky economy. This reluctance can be understandable given high unemployment rates and a toxic housing supply overloaded with foreclosures and short sales continuing to drive home prices down, the source added.
"It is hard to get optimism right now about this sector," said economist David Semmens in a research note. "Mortgage lending remains weak and consumers are cautious; hardly the recipe for a housing comeback."
