Freddie Mac yesterday released the latest results of its Primary Mortgage Market Survey, and it found what by now has become common – that average fixed mortgage rates hit record lows last week.
The 30-year FRM averaged just 3.79 for the week ending May 17, a four basis point decline from the 3.83 percent of the week prior and a substantial drop from the 4.61 percent from last year.
Nick Marascia, the branch manager of Guaranteed Rate in Dallas, said the rates have influenced a number of new transactions.
“We’ve obviously been very busy with refinancing,” Marascia said, “but purchase business has really picked up, too.”
Currently, Marascia said there has been a perfect combination of factors leading to the heightened interest in homebuying. Not only are rates low, but consumer confidence has risen strongly in recent months and home values are extremely attractive. When homes go on the market in his region of Texas, Marascia said they do not last very long.
Even more encouraging, Marascia added, has been the nature of the homebuyers. Many of the documents he comes across have noted that the buyers were initially looking to sign a new lease on a rental unit, but were dissuaded from the decision by their agents, who pointed out the incredible deals currently available in the purchase market.
Frank Nothaft, the vice president and chief economist of Freddie Mac, said economic factors oversees played a big part in the declining rates, which occurred despite positive economic news at home.
“The European debt crisis overshadowed improving economic indicators for the U.S. and allowed Treasury bond yields and fixed mortgage rates to ease for another week,” Nothaft said. “For instance, industrial production rose 1.1 percent in April – the largest gain since December 2010 – and consumer sentiment in May rose to its highest reading since January 2008, according to the University of Michigan.”
The 15-year FRM averaged 3.04 percent, down just one basis point from the week before but 75 basis points from last year, when it averaged 3.80 percent. The 5-year ARM, by comparison, averaged 2.83 percent, up by two basis points from the week before but still down 67 basis points from last year. The 1-year ARM, at 2.78 percent, was up by five basis points but down 27 from last year.