03 Nov 09 Home Mortgage Rates Climb 3 Weeks in a Row
Home buyers can reduce their payments and mortgage rates by buying points, which amount to 1 % of the loan total. The average for home loans in Freddie Mac’s survey was 0.7 points for 30-year home mortgages and 0.6 points for 15-year, five-year and one-year loans. “It’s still a very low rate by longer-term historical standards,” said George Mokrzan, senior economist at Huntington National Bank in Columbus, Ohio. “It’s still very supportive of the housing market and recovery.”
The Federal Reserve last year pledged to buy bonds backed by home loans in order to encourage lower mortgage rates. It increased the size of that program to $1.25 trillion in March. The bond purchases from Fannie Mae, Freddie Mac and Ginnie Mae brought down yields on mortgage-backed securities and allowed lenders to reduce rates on new loans while still selling the securities backed by them at a profit. The plan helped drive mortgage rates to a record low of 4.78 % twice in April. The central bank’s purchasing program is scheduled to end in the first quarter next year, the Federal Open Market Committee said in a statement September 23rd.
Rising borrowing costs and uncertainty over whether Congress will extend a government tax credit for first-time home buyers may have contributed to a drop in mortgage applications last week. The Mortgage Bankers Association’s index of applications to purchase a home or refinance fell 12%, and sales of new homes declined in September, the Commerce Department said Wednesday.
According to the Mortgage Bankers Association, home loan applications dipped 5.2% in the week ended October 23rd and mortgage refinancing volumes declined 16%. New-home purchases in September dropped 3% to a 402,000 annual pace, lower than even the most pessimistic economist’s forecast. It was the first month-to-month decline in sales since March.
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