HSH Market Trends

January 2, 2009 — Mortgage rates were basically unchanged this week, which included the first days of 2009. Thinly traded markets, vacations and holidays being what they are, a lack of any real direction is pretty typical.

Overall, the average 30-year fixed rate mortgage nudged a lone basis point higher. HSH’s Fixed-Rate Mortgage Indicator FRMI rose to 5.89%. The overall average for the 5/1 Hybrid ARM slipped back by fourteen basis points, landing at 5.80% for the week, the lowest such average since February 2008.

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December 26, 2008 — A holiday-shortened week left mortgage rates little changed, but still at very low levels. Most of the latest economic news was on the sour side, imposing a bit of gloom upon the holiday cheer.

With 2008 poised to come to a close, mortgage markets are alive with low rates and refinance opportunities for good-credit-quality applicants. The last few weeks have been perhaps the best of the year for everyone involved in the mortgage industry. Ringing phones and chances to make commissions and fee income wouldn’t normally be so welcome in the midst of the holiday season, but after a very difficult year this situation is perhaps the most desired Christmas gift of all.

Homebuying hasn’t yet picked up, but we’re confident that it will do so — provided mortgage rates remain at these temptingly and historically low levels for the foreseeable future. With the Fed’s unwavering influence in the market, the odds of that are quite good.

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Just a reminder: if you’ve missed any recent editions of the weekly HSH Statistical Release, they’re archived right on this blog.

To see them, you can either select Statistical Release on the ‘Posts by Category’ dropdown on the right, or just click here.

They’re posted every Friday to this blog at the same time as they’re posted to HSH.com.

December 19, 2008 — It was a historic week for mortgages and mortgage markets. Average conforming mortgage rates flirted with breaking the 5% barrier on Wednesday before ticking slightly higher as the week progressed.

In any number of ways, the Federal Reserve was to thank for the drop in rates, but mostly because of the program announced on November 24 to support the mortgage markets. This week’s change in the Federal Funds target rate wasn’t meaningless in this regard, but regular readers of our work know that the Federal Funds target rate and long-term fixed-rate mortgage (FRM) rates have little to do with one another, at least directly.

More important than the change in short-term rates was the reassurance offered to the market that despite the end of the road for one of the Fed’s preferred policy options, the Fed is by no means out of ammunition or ideas to further manipulate markets to effect economic benefit. The Fed statement which accompanied the close of the two-day meeting took pains to note that the $600 billion program to support mortgage markets was getting under way — and could even be expanded if market conditions warranted. As well, the Fed noted that it was considering other more novel ways to influence rates, such as directly purchasing Treasury securities, as well as still other options. Read more about the Fed meeting here.

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December 12, 2008 — Mortgage rates trended along in their new Fed-induced range again this week.

Conforming audiences are enjoying new, much lower costs for mortgage money and are continuing to respond to federal stimuli. Refinance activity did slip a little bit this week — not really surprising, given the impending holiday crush — but still managed to nearly hold onto last week’s big increase.

That earlier surge in refinancing was probably due mostly to borrowers already waiting to pull the trigger on their applications. This week’s still-firm number probably represents a mix of some laggards from that bunch as well as new entrants. Self-sustaining refinancing waves require several factors, including low (and especially steadily-declining) interest rates, sufficient news media coverage about rates and mortgage activity, and increasing buzz around the water cooler (which, these days, includes Twitter and such). The first component seems to be in place, but we’ll need a couple more weeks — and to get out of the holiday season — to get the other two more fully up to speed.
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December 5, 2008 — Mortgage rates moved downward this week, continuing an enthusiastic response to the Federal Reserve’s November 21 plan, and the ongoing decline in still-influential Treasury yields.

Conforming mortgage rates have been the primary benefactor of the Federal Reserve’s influence. The average for a conforming 30-year fixed rate mortgage slipped to a weekly average of 5.57%, down considerably from an October 15 recent peak of 6.75%, and well below the 6.06% seen on the date of the announcement. As well, the 10-day string of rates below 6% represents the longest such string since February.

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