Mortgage loan rates plummet in latest weekly survey, now at 4.63%
May 2011 12

The average 30-year, fixed mortgage rate plummeted during the past week, down from 4.71% on a national basis to 4.63%, according to the Freddie Mac weekly survey of loan providers.

The 30-year fixed-rate mortgage (FRM) averaged 4.63 percent with an average 0.7 point for the week ending May 5, 2011, down from last week when it averaged 4.71 percent. Last year at this time, the 30-year FRM averaged 4.93 percent, so continued good news for buyers, rates are off about 30 basis points.

A $400,000, 30-year, fixed-rate mortgage at 4.63 percent would run you approximately $2,058 per month in loan repayments. This is $19 less per month when compared to last week and $72 in monthly savings compared to last year(!).

This week, 15-year fixed rate mortgages averaged 3.82 percent with an average 0.7 point, up from last week when it averaged 3.89 percent. A year ago at this time, the 15-year FRM averaged 4.30 percent.

Frank Nothaft, vice president and chief economist at Freddie Mac says, “Mortgage rates continued to decline this week following a mixed employment report. The economy added a healthy number of 244,000 workers in April, the most in 11 months, and the figures for March and February were revised up by 56,000 more jobs. However, the unemployment rate rose to 9.0 percent from 8.8 percent in March and was the highest reading since January. In addition, wages grew by only 0.1 percent, which was below the market consensus forecast.

“Distressed homes are suppressing house prices in many local areas. The National Association of Realtors┬« reported these homes sold at a 20 percent discount in the first quarter of this year and accounted for 39 percent of all existing home sales, up from 36 percent in the first quarter of 2010. As a result, only 22 percent of metropolitan areas exhibited higher median sales prices from a year ago, compared to 51 percent in the fourth quarter of 2010.

“However, households have been strengthening their balance sheets over the past year. The New York Federal Reserve Bank reported that the serious delinquency rate (90 or more days delinquent plus foreclosures) on first mortgages and closed-end home equity loans balances fell to 7.46 percent in the first quarter from a peak of 8.89 percent the same period last year. This suggests there may be fewer distressed sales later this year.”

That’s very good news about more homeowners being able to pay their mortgages.

I can only imagine what the future holds for the real estate market. In Boston, we have a steady market with prices remaining near their highs while activity is off by about 25%. American households seem to be getting their finances in order, by lowering outstanding debt and putting money into savings. At some point, you have to imagine, they’ll go shopping for new homes.

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