Mortgage rates snoozed this week, staying near the lowest levels of the year. But these continuously low rates have not been enough to heat up the slow homebuying season.
- The benchmark 30-year fixed-rate mortgage fell to 4.48 percent from 4.49 percent the previous week, according to the Bankrate.com national survey of large lenders. One year ago, that rate stood at 3.73 percent. Four weeks ago, it was 4.5 percent. The mortgages in this week's survey had an average total of 0.31 discount and origination points.
- The benchmark 15-year fixed-rate mortgage fell to 3.5 percent from 3.52 percent last week.
- The benchmark 5/1 adjustable-rate mortgage rose to 3.3 percent from 3.28 percent.
- The benchmark 30-year fixed-rate jumbo rose to 4.51 percent from 4.49 percent.
Weekly national mortgage survey
|Results of Bankrate.com's Feb. 26, 2014, weekly national survey of large lenders and the effect on monthly payments for a $165,000 loan:|
|30-year fixed||15-year fixed||5-year ARM|
|This week's rate:||4.48||3.5||3.3|
|Change from last week:||-0.01||-0.02||+0.02|
|Change from last week:||-$0.98||-$1.62||+$1.82|
Where are the buyers?
Despite the attractive interest rates, the volume of mortgage applications from homebuyers last week reached its lowest level in nearly two decades, according to the Mortgage Bankers Association. Overall, the volume of applications for refinance and purchases decreased 8.5 percent on a seasonally adjusted basis from one week earlier.
"This is the time of a year we would expect a significant pickup in purchase activity, and we are not yet seeing it," says Mike Fratantoni, MBA's chief economist.
Where are the homes?
Lenders have not seen purchase activity pick up yet, partly because of the limited inventory of homes available for sale in certain regions, says Bob Moulton, president of Americana Mortgage in Manhasset, N.Y.
"Some people can't buy houses because there are no houses available," he says. "I have people I have preapproved (for a mortgage) last year and they haven't found a house yet." These are buyers willing to invest $500,000 to $1.5 million in a house, Moulton explains.
By the numbers
Sales of previously owned homes dropped 5.1 percent to a seasonally adjusted annual rate of 4.62 million in January, the National Association of Realtors said last week. That's also 5.1 percent below the pace seen in January 2013.
In contrast, sales of new homes jumped significantly in January. Sales rose 9.6 percent to a seasonally adjusted annual rate of 468,000 units, the highest level since July 2008, according to the Commerce Department. But new-home sales represent only a small portion of the housing market.
Buying a home in zero-degree weather
Extremely low temperatures in many of parts of the country also may be contributing to the slower pace of sales, says John Stearns, a mortgage banker at American Fidelity Mortgage Services in Mequon, Wis.
"At least up here in Wisconsin, when it's zero degrees out, I'm not surprised that people are not out looking at houses," he says. "We are still early in the homebuying season. I expect a strong spring homebuying season."
Will rates wait for the warmer season?
But the question is whether mortgage rates will stay low while buyers wait for warmer weather and for more homes to hit the for-sale market.
For a hint of where mortgage rates may be headed in the near future, keep an eye on the monthly employment report that the Labor Department will release on March 7. A positive report, showing the economy is adding jobs at a healthy pace, could push rates up, Stearns says.
The 30-year fixed mortgage rate is expected to reach 4.9 percent by the third quarter of this year, according to the MBA. That's not a huge jump, but it means about $75 more per month for a buyer who needs a $300,000 loan.
Home prices might not wait
Buyers also have to consider how rising home prices may affect their ability to purchase a home if they wait, Stearns says.
"A quarter of a percentage point in rate is not going to make or break the deal, but when you add that to home prices going up, then it's a different story," he says.
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