Fears of a slumping housing market, a big equities correction and disappointing earnings reports all add up to bad news for the economy. But it’s good news for borrowers.
Negative housing market data helped push mortgage rates lower this week, with the 30-year fixed rate at 4.23 percent, down from last week’s 4.32 percent.
A year ago, the 30-year rate averaged 3.53 percent, record low territory.
Nonetheless, slumping rates now create more refinancing possibilities for “underwater” borrowers, and fresh opportunities for first-time home buyers.
“Mortgage rates fell further this week following the release of weaker housing data,” said Frank Nothaft, vice president and chief economist, Freddie Mac. “The pending home sales index fell 8.7 percent in December to its lowest level since October 2011.”
Nothaft added that fixed residential investment negatively contributed to GDP (gross domestic product) in the fourth quarter for the first time since the third quarter of 2010.
Moreover, the Institute for Supply Management reported a significant slowing in growth in the manufacturing industry in December than the market consensus forecast.
Here is Freddie Mac’s overview of interest rates
- 30-year fixed-rate mortgage (FRM) averaged 4.23 percent, with an average 0.7 point, for the week ending February 6, 2014, down from last week when it averaged 4.32 percent. A year ago at this time, the 30-year FRM averaged 3.53 percent.
- 15-year FRM this week averaged 3.33 percent, with an average 0.7 point, down from last week when it averaged 3.40 percent. A year ago at this time, the 15-year FRM averaged 2.77 percent.
- 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.08 percent this week, with an average 0.5 point, down from last week when it averaged 3.12 percent. A year ago, the 5-year ARM averaged 2.63 percent.
- 1-year Treasury-indexed ARM averaged 2.51 percent this week, with an average 0.5 point, down from last week when it averaged 2.55 percent. At this time last year, the 1-year ARM averaged 2.53 percent.