30-Yr Mortgage Rates Sink to 5.83 Percent

Reuters ^ | 11/20/2003 | By Christopher Doering

[ClintonBeGone]

WASHINGTON (Reuters) - Interest rates on U.S. 30-year fixed rate mortgages plunged in the latest week after key Federal Reserve officials said inflation would not be a major factor for the economy in the near term, Freddie Mac said on Thursday.

Freddie Mac, the No. 2 U.S. home mortgage financier, said interest rates on a 30-year fixed-rate mortgage, the most popular U.S. home loan, dropped to an average of 5.83 percent in the week ending Nov. 21 from 6.03 percent the previous week.

Fifteen-year mortgage rates also fell to an average of 5.17 percent from 5.39 percent last week, while one-year adjustable rate mortgages dipped to an average of 3.72 percent from 3.76 percent last week.

A year ago, 30-year mortgage rates averaged 6.03 percent, 15-year mortgage rates were at 5.44 percent and the ARM averaged 4.14 percent, according to Freddie Mac. The company, chartered by Congress but publicly traded, buys mortgages from lenders and packages them into securities for investors or holds them in its own portfolio.

"Over the past week, several high-ranking Federal Reserve officials gave speeches indicating that inflation remains a nonevent," said Frank Nothaft, Freddie Mac chief economist. "The bond market rallied and this caused mortgage rates to fall."

In the most recent announcement, Chicago Fed President Michael Moskow said on Thursday that even with strong economic growth next year, inflation is unlikely to pick up significantly, suggesting Fed policy can remain accommodative.

"Even though growth last quarter was exceptionally strong, we are still likely quite a ways from seeing the kinds of pressure on labor and capital resources that often signal an increase in inflation," Moskow told the Chicagoland Chamber of Commerce (news - web sites).

Home mortgage interest rates have moved in a tight range near 6 percent in recent months after posting record lows last summer. But limited inventories and historic low rates continue to draw existing homeowners to refinance and entice prospective new buyers to take the plunge and purchase their own home.

The Fed has pledged to keep the agency's benchmark federal funds rate at 1 percent, the lowest level since 1958 for some time.

Freddie Mac said lenders charged an average of 0.6 percent in fees and points on 30-year mortgages and 0.7 percent on the ARM in the week ending Nov. 21, both unchanged from last week. Lenders charged 0.7 percent in fees and points on 15-year mortgages in the latest week, up from 0.6 percent a week ago.

BLISTERING HOME-BUILDING PACE

As investors expect long-term interest rates to remain relatively low, mortgage rates have followed, making it less costly for consumers to borrow money to finance their homes.

Builders broke ground for new U.S. single-family homes and applied for permits to build them at record high paces in October, led by low mortgage rates, the Commerce Department (news - web sites) said on Wednesday.

Total U.S. housing starts -- consisting of single- and multi-family homes -- jumped 2.9 percent to a seasonally adjusted annual rate of 1.960 million units in October from an upwardly revised 1.905 million pace in September, hitting the highest pace since January 1986.

Permits to build single-family homes rose 3.2 percent to 1.535 million units -- the highest on record.

The Mortgage Bankers Association said applications for U.S. home loans rose last week as new requests for loans to buy homes picked up.

[ClintonBeGone]

Still a good time to become a land owner.

[JNB]

Yep, govrenmnet intervention keeping rates artifically low that would even make many full on Socialists blush has dramatically helped landowners in the last 3 years.

[Geezerette]

I re-financed this summer at 5.375% on a 30-year fixed! I really am glad I "struck while the iron was hot"!

g

[Cobra64]

Yup. My wife Karen and I are looking to get a $200k loan for our new house. Do you have any ideas / suggestions? We live in NC and are building a house on Lake James. The local banks are headquartered in Charlotte. What do you think? Were not bankers and would invite your input. Thanks in advance. Cheers.

[Indy Pendance]

We got 4.75, 15 years. Boy, did we get a fantastic deal when we re-fied. It really helps to keep your credit rating flawless, and to check it for errors.

[Indy Pendance]

Go to several lenders, and check online to see what they have. It doesn't hurt to mention, XYZ company will give me this rate if it's lower, but don't make it up, they all know what each other is doing. Also, see if any of your existing creditors have home loans. They have your history. Good luck!

[calljack]

http://www.phhmortgage.com/home/landscape?cid=13571
lowest closing costs around. They will go 95% with very little extra cost. Great mortgage rates.

[ClintonBeGone]

Yep, govrenmnet intervention keeping rates artifically low that would even make many full on Socialists blush has dramatically helped landowners in the last 3 years.

How has government intervened? Its 10 year bonds are subject to the same market forces as mortgage back securities.

[ClintonBeGone]

I re-financed this summer at 5.375% on a 30-year fixed! I really am glad I "struck while the iron was hot"!

Damn, that's good. No points?

[ClintonBeGone]

Yup. My wife Karen and I are looking to get a $200k loan for our new house. Do you have any ideas / suggestions? We live in NC and are building a house on Lake James. The local banks are headquartered in Charlotte. What do you think? Were not bankers and would invite your input. Thanks in advance. Cheers.

If you need a construction loan, try to find a broker that works with Washington Mutual. They have a great construction loan package which allows for only one closing. You don't want to pay closing costs twice - once for the construction loan, and once for the final financing. If you have good credit (over 700 score) you should find a broker who will do the loan with no origination fee. If you shopped this week, you can still find rates under 6%.

[Moonman62]

"Even though growth last quarter was exceptionally strong, we are still likely quite a ways from seeing the kinds of pressure on labor and capital resources that often signal an increase in inflation," Moskow told the Chicagoland Chamber of Commerce

Inflation is caused by government default on its debt, currency manipulation that's gone bad, or a large scale war. Full employment has never been shown to cause anything more that one percent inflation, if that.

[ClintonBeGone]

They will go 95% with very little extra cost. Great mortgage rates.

I doubt he can find a lender for a construction loan that will go 95%. With good credit he could do a no money down (except the closing costs)80/20 loan for the final financing, but the nice thing about Washington Mutual (no, I don't work for them) he'll only have to pay closing costs once.

[JNB]

The intervention started in the Clinton admin with Rubins insane strong dollar policy(thankfully this is now being taken apart), with Japan buying US bonds non stop to keep the Yen week. Also, the power, size and scope of FNM/FRE, another Clinton admin project, dramatically increased in the 90s with the implided govrenmnet backing, and less oversight than ever before. The 10 year bond has been subject to anything but market forces the last few years with the Bank of Japan buying tens of billions a month, with the tresury doing everything they can to issues less ten year bonds, with the infamous elimination of new 30 year bond issues 2 years ago in a desperate attempt to keep rates artificlaly low. I am glad the Bush admin got rid of that moron O Neil as tresury secutary, but the currency moves taking place now should have taken place two and a half years ago.

[Pamlico]

I am mortgage banker and rates were great in May and June. The best deal at that time was 30 year fixed at 5.25% no points, no fees, no closing costs. I worked 80 hour weeks and still could not help everyone. Rates are still good, I quoted 5.875% for the same deal today.

[ClintonBeGone]

Full employment has never been shown to cause anything more that one percent inflation, if that.

Such an important point, yet so few, even here, understand it. I'm convinced even professional market people don't know what you and I do.

[ClintonBeGone]

I disagree. Freddie Mac and Fannie Mae, as well as the Japanese government are not part of the Clinton/Rubin conspiracy. Also, it's pretty far fetched to say the government has any DIRECT effect on interest rates for instruments that extend beyond one year. I'm sure George Soros would agree.

[ClintonBeGone]

I worked 80 hour weeks and still could not help everyone. Rates are still good, I quoted 5.875% for the same deal today.

Would you agree with the one close construction loan for Cobra64?

[JNB]

FRE/FNM are a slap to anyone who supports a concept of a free market economy, and look it up, the size and scope of these GSEs dramatically increased in the 90s. As for the the intrest rates and Japanese problems of today, that stems directly from the strong dollar policy, that has worked out for the short/intermediate term for the US, but helpede cause the trade gap to skyrocket, and made Japan less willing to take the steps required to reform their economy because they have been able latch on to the US consumer for a little bit longer.

Anyone who supports the concept of a free market would be disgusted at GSE and the various currency minipulations.

[Pamlico]

It depends on the total costs. I close numerous permanent mortgages paying off the construction loan of a local bank every month. As a mortgage banker, my fees and rates are generally lower than a broker. He should shop around and compare.

[Tripleplay]

We got 4.75, 15 years. Boy, did we get a fantastic deal when we re-fied. It really helps to keep your credit rating flawless, and to check it for errors.

4.5%.....10 years.....no points......closed earlier this year.......your absolutely right about the credit rating