HSH Market Trends

September 3, 2010 — The economic news has certainly been nothing to cheer about over the last month or two, but at least some important indicators don’t suggest that any double-dip recession is imminent.

HSH’s overall mortgage monitor — our weekly Fixed-Rate Mortgage Indicator (FRMI) — dipped back by another two basis points, closing our survey at an average 4.76%, a new low. The FRMI includes rates for conforming, jumbo, and most recently the GSE’s “high-limit” conforming products and so covers much of the mortgage-borrowing public. For borrowers who don’t need a long-term, fixed rate mortgages, a viable choice might be a Hybrid 5/1 ARM, which ended the week at an unchanged average rate of 3.73%.

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August 27, 2010 — Economic growth has weakened to the point where we now have 1.6% GDP readings as bookends to the year-old recovery. After the deep recession, any positive growth readings are of course welcome, but the very muted pace of growth in the second quarter of 2010 isn’t warm enough to feel much different than the recession did.

Addressing the audience at the annual Economic Symposium in Jackson Hole, Wyoming, Federal Reserve Chair Ben Bernanke detailed the Fed’s disappointment with the present rate of growth, and stock markets were cheered that he took pains to express both optimism for the coming year and that the Fed still has tools it can employ to ward off deflation or even a double-dip recession. Frankly, what else could he say?

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August 20, 2010 — An ongoing string of poor economic news continues to press mortgage rates lower. Already in record-low territory, they are again approaching levels which spark renewed interest in refinancing. These low-rate chances can provide excellent opportunities for certain borrowers, but fall short of a broad-spectrum salve to pour onto economic wounds which still run wide and deep.

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August 13, 2010 — It goes without saying that the deceleration in economic activity has become more pronounced in recent months. At the close of its meeting on Tuesday, the Federal Reserve acknowledged as much, and got itself back in the “quantitative easing” game but in a different way than before.

The Federal Reserve undertook steps to help long-term interest rates to be more stable and lower than they would otherwise have been when they initiated programs to purchase both MBS and Treasury obligations in 2008, 2009 and 2010. Those programs came to a close at varying intervals over the past year and generally had the desired effect on rates and credit availability.

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August 6, 2010 — The first week of the month has rolled around again, and although it’s a brand-new month it seems we have the same old economic story we’ve had for the past few: Slow growth, no jobs and low mortgage rates.

From the depths of a pretty significant recession, the economy recovered to run at a 5% rate during the last quarter of last year, but has lost considerable momentum since then. Prospects are not improving for a speedy return to quicker growth, but that is serving to keep mortgage rates at fantastic levels.

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July 30, 2010 — With the deceleration in the economy now quantified, mortgage rates stopped falling this week. As prospects for a speedy recovery begin to fade, and inflation pressures bleed from the system, interest rates are less likely to find reasons to rise anytime soon.

Each week for some 30 years, HSH has produced an overall mortgage monitor — our our Fixed-Rate Mortgage Indicator (FRMI). The FRMI includes rates for conforming, jumbo, and most recently the GSE’s “high-limit” conforming products and so covers much of the mortgage-borrowing public. This week, the FRMI remained in record-low territory even though it lifted by two basis points (.02%) to 4.92%. For borrowers for whom a long-term fixed-rate mortgage doesn’t fit the bill, the next-most popular choice is the hybrid 5/1 ARM, which finished the survey week at 3.92%.

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