Mortgage rates inched down for the third week in a row as investors tried to make sense of mixed economic data while the housing market continued to gain steam.
30 year fixed rate mortgage 3 month trend
The benchmark 30-year fixed-rate mortgage fell to 3.73 percent from 3.75 percent, according to the Bankrate.com national survey of large lenders. The mortgages in this week's survey had an average total of 0.3 discount and origination points. One year ago, the mortgage index stood at 4.25 percent; four weeks ago, it was 3.73 percent.
The benchmark 15-year fixed-rate mortgage fell to 2.95 percent from 2.97 percent. The benchmark 5/1 adjustable-rate mortgage rose to 2.72 percent from 2.71 percent.
Weekly national mortgage survey
Results of Bankrate.com's April 3, 2013, 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:||3.73%||2.95%||2.72%|
|Change from last week:||-0.02||-0.02||+0.01|
|Change from last week:||-$1.87||-$1.58||+$0.87|
Will jobs market help or hurt rates?
This downward trend might continue into next week, depending on the results of the closely watched monthly employment report that the Labor Department releases Friday. A weak jobs report normally helps keep a lid on mortgage rates. That's because when investors become more cautious about the economy, they seek safer investments.
Economists expect to see healthy job growth in March, but other employment data released this week have disappointed investors so far. On Wednesday, payrolls processor ADP released a report showing that private employers added 158,000 jobs in March, the slowest pace in five months. Economists had expected about 200,000 new jobs.
The weaker number is mainly attributed to a pause in hiring by construction companies, rather than a general slowdown of the labor market, says Mark Zandi, chief economist for Moody's Analytics.
Still, the weak news from ADP dampened investors' sentiment, which should help mortgage rates.
It will weigh a bit on the stock market and maybe provide a little lift to the bond market, Zandi says of the jobs data. The temporary pullback should keep rates low for now, he says.
More buyers, fewer refinancers
Despite the decline in rates, fewer homeowners tried to refinance their mortgages last week. The volume of refinance applications decreased 6 percent last week compared to a week earlier, according to the Mortgage Bankers Association's weekly survey.
John Stearns, a mortgage banker for American Fidelity Mortgage Services in Mequon, Wis., says he expects refinance activity to pick up again as home prices increase and homeowners regain equity in their homes.
People who didn't have enough equity to refinance a couple of years ago may be able to refinance as home values are going up, he says. The Home Affordable Refinance Program allows underwater homeowners to refinance, but not all homeowners qualify for HARP, Stearns adds.
Rising home prices also have been a wake-up call to many homebuyers who had been sitting on the sidelines. The MBA says the volume of purchase mortgage applications rose last week, especially for Federal Housing Administration loans, which is a popular loan for first-time buyers.
Housing market rebounds
Home prices improved in February at the best rate since mid-2006, CoreLogic said Wednesday.
The real estate data provider released a report showing home prices nationwide, including distressed sales, increased 10.2 percent compared to the same period last year. Prices rose by 0.5 percent compared to January.
Continued home price appreciation will provide fuel needed to drive further recovery in the home purchase market, says Anand Nallathambi, CoreLogic's president and chief executive officer.
Will the low rates stick around for buyers? Probably, Stearns says.
I don't see rates going over 4 percent anytime soon, he says.
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