Time for clients to refi? Mortgage rates hit lowest on record

Time for clients to refi? Mortgage rates hit lowest on record
Rate on average 30-year fixed loan falls to 4.12%; 'homebuyers are not responding'
AUG 31, 2011
By  John Goff
U.S. mortgage rates tumbled to the lowest in at least four decades as stagnant job growth and concern that Europe's debt crisis is deepening drove investors to the relative safety of government bonds. The average rate for a 30-year fixed loan dropped to 4.12 percent in the week ended today from 4.22 percent, Freddie Mac said in a statement today. That's the lowest in the McLean, Virginia-based company's records dating back to 1971. The average 15-year rate fell to 3.33 percent from 3.39 percent. Yields on 10-year Treasury bonds, a benchmark for consumer loans including mortgages, touched an all-time low Sept. 6 on signs that the U.S. economic recovery has stalled and the euro region is struggling to contain its debt burden. Low borrowing costs have done little to lift the housing market as the unemployment rate sticks above 9 percent. No new jobs were added in August, the Labor Department said last week. “Homebuyers are not responding to these record-low interest rates,” said Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts. “The reason interest rates are dropping recently is that the outlook for the economy has gotten weaker. A smart person would be very careful about buying a home unless he thinks his job is very secure.” The previous low for a 30-year fixed mortgage was 4.15 percent for the week that ended Aug. 18. Data from the National Bureau of Economic Research measuring Federal Housing Administration loans indicate that long-term borrowing costs are the lowest since the 1950s, according to Chad Wandler, a spokesman for Freddie Mac. Applications Decline Mortgage applications dropped 4.9 percent in the week ended Sept. 2, the Mortgage Bankers Association said yesterday. The Washington-based group's refinancing index fell 6.3 percent while the purchase gauge rose 0.2 percent, a second straight gain after falling to the lowest level since December 1996. The number of contracts to purchase previously owned homes in July fell 1.3 percent, the first decline in three months, the National Association of Realtors said Aug. 29. “The housing market remains challenging primarily due to uncertainty caused by general domestic economic and political concerns, stock market volatility and turbulent international economic conditions,” Ara K. Hovnanian, chairman and chief executive officer of homebuilder Hovnanian Enterprises Inc., said in a statement yesterday. “We see very few indicators that any recovery in the housing market has begun.” Fannie Mae, Freddie Mac's larger rival, found in a survey that 78 percent of Americans said the economy is on the wrong track in August, up from 70 percent the previous month. Twenty- two percent of respondents said they expect their financial condition to worsen in the next year, up from 20 percent in July, according to a report released today by the mortgage- finance company. Twenty-seven percent of respondents expect home prices to decline in the next year, the largest share in the monthly survey since August 2010. While 69 percent said it was a good time to buy a home, only 9 percent said it was a good time to sell. Fannie Mae polled 1,001 Americans in telephone interviews from Aug. 2 to Aug. 25. --Bloomberg News--

Latest News

The fight over the CFPB is just beginning
The fight over the CFPB is just beginning

Locked out of their offices and told to stay home, employees at the Consumer Financial Protection Bureau have asked the courts to intervene as Elon Musk and Republican leaders move to shut down the agency that was established to protect people from predatory lending and financial scams.

Business-focused wealth tech RISR lands $8B Wealthcare Capital Management partnership
Business-focused wealth tech RISR lands $8B Wealthcare Capital Management partnership

Fintech platform interVal has also introduced a new feature to help advisors support entrepreneurial business owner clients better.

LPL boosts revenue potential with amped-up alts platform
LPL boosts revenue potential with amped-up alts platform

Along with greater revenue, alternative investments also carry risks, one industry lawyer noted.

How SageSpring Wealth Partners' next-gen strategy has fueled its success
How SageSpring Wealth Partners' next-gen strategy has fueled its success

President Jeff Dobyns unpacks the strategic power of mentorship, what makes an "ideal team player," and how the firm's 89 percent success rate has paid off for veteran advisors.

Powell heads for hot-seat hearings with ongoing pressure from Trump policies
Powell heads for hot-seat hearings with ongoing pressure from Trump policies

The Fed chair is in for some "hyper-charged" meetings, with legislators likely to raise questions on tariff threats and apparent steps to comply with anti-DEI orders.

SPONSORED Taylor Matthews on what's behind Farther's rapid growth

From 'no clients' to reshaping wealth management, Farther blends tech and trust to deliver family-office experience at scale.

SPONSORED Why wealth advisors should care about the future of federal tax policy

Blue Vault features expert strategies to harness for maximum client advantage.