National mortgage rate average heads downward after increase in past year; remains on low side
WASHINGTON (AP) - Mortgages rates declined earlier this month, edging closer to historically low levels as the spring home-buying season begins.
Mortgage buyer Freddie Mac said late last week that the average rate for the 30-year loan fell to 4.34 percent from 4.41 percent a week earlier. The average for the 15-year mortgage eased to 3.38 percent from 3.47 percent.
Mortgage rates have risen around a full percentage point since hitting record lows about a year ago.
Going into the spring buying season, the housing market faces a dilemma: Too few people are selling homes. Yet too few buyers can afford the homes that are for sale.
A double-digit jump in the average price of a home sold last year hasn't managed to coax more homeowners to sell. And combined with higher mortgage rates, higher prices have made homes costlier for first-time buyers as well as for all-cash investors.
Refinancing's share of mortgage applications fell from 53 percent to 51 percent in the week ended April 4. That's the lowest level since July 2009, the Mortgage Bankers Association reported last week.
Average home prices nationally are expected to rise by single digits this year. The gains could be strongest in areas with solid job growth, such as Seattle and Austin, Texas.
Greater Charleston-North Charleston could fit in the same category. Forbes magazine, in a recent survey of the best places for businesses and careers, says the Lowcountry ranks 28th among metro areas in job growth with a 3 percent annual rate as of 2012.
National mortgage rate increases in the past year were driven by speculation that the Federal Reserve would reduce its $85 billion-a-month bond purchases. The purchases have helped keep long-term interest rates low: Mortgage rate movements most closely follow long-term bond rates.
Since December, the Fed has announced three $10 billion declines in its monthly bond purchases. The latest plan is to cut its monthly long-term bond purchases to $55 billion because it thinks the economy is steadily healing.
The Fed also indicated after its two-day policy meeting in March that interest rates will stay well below average.
Even after it raises short-term interest rates, the job market strengthens and inflation rises, the central bank expects its benchmark short-term rate to stay unusually low.
To calculate average mortgage rates, Freddie Mac surveys lenders across the country between Monday and Wednesday each week. The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount, or $1,000 on a $100,000 mortgage.
The average fee for a 30-year mortgage was unchanged at 0.7 point. The fee for a 15-year loan remained at 0.6 point.
According to Bankrate.com, lenders are advertising mortgage rates in the Charleston area as low as 4.095 percent to 4.375 percent for a 30-year fixed mortgage with 0 points. The quote rates also depend on credit scores and down payment amounts.
Meanwhile, the average national rate on a one-year adjustable-rate mortgage fell to 2.41 percent from 2.45 percent. The average fee on a one-year ARM rose to 0.5 point from 0.4 point. Also, the average rate on a five-year adjustable mortgage declined to 3.09 percent from 3.12 percent, while the fee held steady at 0.5 point.