The Primary Mortgage Market Survey is based on calculated, well thought out numbers that have huge economic effects. There’s no wiggle room when it comes to determining mortgage rates; it’s based on a number of economic factors and it can mean the world to a new home buyer or someone looking to refinance. The cold, hard numbers are good this week: rates lowered a bit, breaking their rising trend. However, as you can see on the line graph, something interesting has emerged. Look closer- do you see something in the rising and falling and rising of the mortgage rates? If not, look at this picture below.
There’s a wolf! What does it mean? How does it affect mortgage rates? I’m no mystic, but maybe this is a sign! Quick, let’s look at the raw numbers from Freddie Mac to see if it means something:
30-year fixed-rate mortgage (FRM) averaged 4.51% with an average 0.7 point for the week ending August 29, 2013, down from last week when it averaged 4.58%. A year ago at this time, the 30-year FRM averaged 3.59%.
15-year FRM this week averaged 3.54% with an average 0.7 point, down from last week when it averaged 3.60%. A year ago at this time, the 15-year FRM averaged 2.86%.
5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.24% this week with an average 0.5 point, up from last week when it averaged 3.21%. A year ago, the 5-year ARM averaged 2.78%.
1-year Treasury-indexed ARM averaged 2.64% this week with an average 0.4 point, up from last week when it averaged 2.67%. At this time last year, the 1-year ARM averaged 2.63%.
Okay, so if the wolf is howling at the moon, maybe it means rates are rising? Or perhaps the howling wolf means it’s the dawn of a new day, like calling for lower rates to break the recent trend of rising rates? Tell us your secrets, mortgage rate wolf! While we examine the enigma that is the PMMS report line graph, let’s see if Frank Nothaft, vice president and chief economist of Freddie Mac, has a clearer head about this.
“The Fed is monitoring the housing market closely after the run up in mortgage rates over the past few months. The 13.4% drop in new home sales in July led financial markets to speculate whether the Fed might delay reducing its bond purchases and allowed long-term bond yields and fixed mortgage rates to decline over the week.”