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Mortgage Rates

MN Mortgage Interest Rates

Mortgage rates set new record lows for week ending Nov 9, 2012

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Mortgage Rates Dip To New Record Lows *

Minneapolis, MN.  Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing fixed mortgage rates dipping to new all-time record lows amid indicators of higher consumer confidence and lower wholesale prices. The previous record low for the 30-year fixed was set the week of October 4, when it averaged 3.36 percent, and the 15-year fixed was set the week of October 18, when it averaged 2.66 percent.

News Facts

  • 30-year fixed-rate mortgages (FRM) averaged 3.34 percent with an average 0.7 point for the week ending November 15, 2012, down from last week when it averaged 3.40 percent. Last year at this time, the 30-year FRM averaged 4.00 percent.
  • 15-year mortgages this week averaged 2.65 percent with an average 0.7 point, down from last week when it averaged 2.69 percent. A year ago at this time, the 15-year FRM averaged 3.31 percent.
  • 5-year adjustable (ARM) Mortgages (ARM) averaged 2.74 percent this week with an average 0.6 point, up from last week when it averaged 2.73 percent. A year ago, the 5-year ARM averaged 2.97 percent.

Quotes

Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

“Fixed mortgage rates eased this week to record lows on indicators of higher consumer confidence and lower wholesale prices. Consumer sentiment rose in November to the highest reading since July 2007 according to the University of Michigan. Meanwhile, the core producer price index fell 0.2 percent in October.”

Freddie Mac’s survey is the average of loans bought from lenders * last week, including discount points. Applicants must pay all closing costs at these rates. No cost loan rates higher.

Follow this link to view today’s best MN and WI mortgage interest rates.

Mortgages rates hover near record lows for week ending Nov 2, 2012

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Mortgage Rates Settle in Near Record Lows

Minneapolis, MN: Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing fixed mortgage rates mixed following the monthly employment report but continuing to hover near their record lows over the past six weeks. Last year at this time, the 30-year fixed-rate mortgage averaged 3.99 percent, dropping below 4.00 percent for the first time since Freddie Mac started reporting its weekly mortgage rates survey in 1971.

News Facts

  • 30-year fixed-rate mortgages (FRM) averaged 3.40 percent with an average 0.7 point for the week ending November 8, 2012, up from last week when it averaged 3.39 percent. Last year at this time, the 30-year FRM averaged 3.99 percent.
  • 15-year fixed rate mortgages this week averaged 2.69 percent with an average 0.7 point, down from last week when it averaged 2.70 percent. A year ago at this time, the 15-year FRM averaged 3.30 percent.
  • 5-year adjustable mortgages (ARM) averaged 2.73 percent this week with an average 0.6 point, down from last week when it averaged 2.74 percent. A year ago, the 5-year ARM averaged 2.98 percent.

Quotes

Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

“Mortgage rates remained near record lows following the employment report for October. The economy added 171,000 jobs, above the market consensus forecast, and the two prior months were revised up a combined 84,000. The Labor Department also reported that the unemployment rate ticked up to 7.9 percent and that average hourly wages were unchanged.”

Freddie Mac’s survey is the average of loans bought from lenders last week, including discount points. Applicants must pay all closing costs at these rates. No cost loan rates higher.

Follow this link to view today’s MN and WI mortgage interest rates.

 

Mortgages Rates for week ending Oct 26th, 2012

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Mortgage Rates Continue To Hover Near Record Lows

St Paul, MN: Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing fixed mortgage rates moving slightly lower while continuing to remain near their all-time lows this week amid signs of a growing economy and low inflation.

News Facts

  • 30-year fixed-rate mortgage rates (FRM) averaged 3.39 percent with an average 0.7 point for the week ending November 1, 2012, down from last week when it averaged 3.41 percent. Last year at this time, the 30-year FRM averaged 4.00 percent.
  • 15-year fixed rates mortgage rates this week averaged 2.70 percent with an average 0.7 point, down from last week when it averaged 2.72 percent. A year ago at this time, the 15-year FRM averaged 3.31 percent.
  • 5-year adjustable mortgage rates (ARM) averaged 2.74 percent this week with an average 0.6 point, down from last week when it averaged 2.75 percent. A year ago, the 5-year ARM averaged 2.96 percent.

Quotes

Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

“Mortgage rates remained relatively unchanged this week on signs of a growing economy and low inflation. The economy grew 2.0 percent in the third quarter with residential fixed investment contributing 0.3 percentage points to growth. The core price index of personal consumer expenditures grew 1.7 percent between September 2011 and 2012 and was within the Federal Reserve’s preferred target range.”

Freddie Mac’s survey is the average of loans bought from lenders last week, including discount points. Applicants must pay all closing costs at these rates. No cost loan rates higher.

Follow this link to view today’s MN and WI mortgage interest rates.

 

After real estate crash, giant lenders allowed to dominate

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Minneapolis, MN:  Mortgage rates are so low that it may seem like a great time to get a mortgage. For banks, however, it probably is the greatest time ever.

In the old days, there used to be a word for this kind of thing: price gouging.

And who is doing the gouging? Mainly, Wells Fargo and JPMorgan Chase. In the third quarter, reported in the last several weeks, both banks earned robust profits from the mortgage business.

READ THE FULL STORY

 

MN Mortgage Rates Remain Basically Unchanged

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Mortgage Rates Relatively Unchanged

Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing fixed mortgage rates moving slightly higher while continuing to remain near their all-time lows helping to support the housing market.

News Facts

  • 30-year fixed-rate mortgages (FRM) averaged 3.41 percent with an average 0.7 point for the week ending October 25, 2012, up from last week when it averaged 3.37 percent. Last year at this time, the 30-year FRM averaged 4.10 percent.
  • 15-year fixed rate mortgages this week averaged 2.72 percent with an average 0.6 point, up from last week when it averaged 2.66 percent. A year ago at this time, the 15-year FRM averaged 3.38 percent.
  • 5-year adjustable-rate mortgages (ARM) averaged 2.75 percent this week with an average 0.6 point, the same as last week. A year ago, the 5-year ARM averaged 3.08 percent.

Quotes
Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

“Mortgage rates remained relatively unchanged this week and should continue to support the housing market and mortgage refinance. Existing home sales in September eased slightly to 4.75 million but was the second strongest annualized pace since May 2010. Moreover, new home sales rose to the most since April 2010. In addition, low rates and strong demand have already pushed the FHFA purchase-only home price index in August to its highest level (seasonally adjusted) since June 2010. And not surprisingly, the Federal Reserve in its October 24th monetary policy announcement acknowledged the further signs of improvement in the housing sector, albeit from a depressed level.”

Freddie Mac’s survey is the average of loans bought from lenders last week, including discount points. Applicants must pay all closing costs at these rates. No cost loan rates higher.

Follow this link to view today’s MN and WI mortgage interest rates.

 

Waiting for lower rates could be costly

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St Paul, MN: We get it. You want the lowest mortgage interest rates. What you may not realize is that waiting for that low rate could make you your own worst enemy.

When shopping mortgage rates, understand that the quote you got yesterday or last week is meaningless. Interest rates can change throughout the day and that may cost you dearly while you think about it. Face it, rates change daily – sometimes even multiple times in one day.

Did you know you can pick any interest rate you want? Do you know the difference between the rate and pricing for the rate? Are you willing to pay the price to get a rate? Do you want lower closing costs? Has your loan officer explained these options and differences?

Have you ever thought “When the rate hits (your rate here), I’ll lock.” When the rate does hit your mark there is nothing lenders can do because the application/approval process hasn’t begun. Knowing this here is a simple plan to position you to lock in rates that meet both your payment and equity objectives.

1. Call a local licensed loan officer (not a bank) and begin discussing the refinancing of your home, along with the best rate and cost options to fit your needs.

NOTE: It goes against the grain of what most people think, but your current lender is almost without fail, the most expensive refinance option.

2. If the refinance rate and savings makes sense, start an application with your local lender, but don’t pay any application fee. You may have to pay a small fee to have them pull your credit. If they request/demand an application fee, or have cancellation fees you should select another lender no matter how great their interest rate quote appears.

3. Once the lender has you in application you’re now in a position to lock in a rate that meets both your payment and equity objectives and in the interim you can begin gathering all the needed items to seek an approval for you loan. Starting an application and signing the initial disclosures does not constitute a contract. You are under no obligations at this time to continue.  It does however, allow for an approval, which simplifies the entire process and puts you in the best position of strength for obtaining and locking your rate or making an offer on a new home.

Should you lock a rate, or hold out for something better?

We are asked this question an untold number of times a week. Everyone wants “the lowest rate” and no matter what great refinance rate I quote, human nature takes over. Everyone panics about locking today, because “what if rates go lower next week?” The first question to ask yourself is “Does the rate meet my payment objective?” If so, then lock, it really is that simple.

When the decision to lock has been made there are three possible outcomes;

  • Rates drop – ok, not good, but usually not enough to realistically impact a decision.
  • Rates remain the same – No worries
  • Rates go up – Lucky me, I locked!

So using the three outcomes above you only have a 33% chance of a rate improvement, and a 66% of no change or rates going higher.  What kind of gambler are you?

Mortgage Rates Continue Near Record Lows

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Mortgage Rates Near Record Lows As Home Construction Builds Up Steam

Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing fixed mortgage rates edging slightly lower with the 30-year fixed averaging 3.37 percent, just above its all-time record low of 3.36 percent, and the average 15-year fixed dipping to a new all-time record low at 2.66 percent.

News Facts

  • 30-year fixed-rate mortgages (FRM) averaged 3.37 percent with an average 0.7 point for the week ending October 18, 2012, down from last week when it averaged 3.39 percent. Last year at this time, the 30-year FRM averaged 4.11 percent.
  • 15-year fixed rate mortgages this week averaged 2.66 percent with an average 0.6 point, down from last week when it averaged 2.70 percent. A year ago at this time, the 15-year FRM averaged 3.38 percent.
  • 5-year adjustable-rate mortgages (ARM) averaged 2.75 percent this week with an average 0.6 point, up from last week when it averaged 2.73 percent. A year ago, the 5-year ARM averaged 3.01 percent.

Quotes

Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

“Mortgage rates remained more or less unchanged this week as home construction builds up steam.  Construction on single-family homes jumped to an annualized rate of 11 percent in August, the strongest pace since August 2008. Over the first nine months of the year, single-family starts were 23 percent higher than the same period last year. Moreover, home builder confidence rose for the sixth consecutive month in October to the highest level since June 2006, according to the NAHB/Wells Fargo Housing Market Index.”

Freddie Mac’s survey is the average of loans bought from lenders last week, including discount points. Applicants must pay all closing costs at these rates. No cost loan rates higher.

Follow this link to view today’s MN and WI mortgage interest rates.

Little change in Mortgage Rates this week following employment report

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Mortgage Rates Change Little Following Employment Report

Minneapolis, MN: Freddie Mac (OTC: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), showing average fixed mortgage rates edging slightly higher while remaining near their all-time record lows coming off the employment report for September.

News Facts 

  • 30-year fixed-rate mortgages (FRM) averaged 3.39 percent with an average 0.7 point for the week ending October 11, 2012, up from last week when it averaged 3.36 percent. Last year at this time, the 30-year FRM averaged 4.12 percent.
  • 15-year fixed rate mortgages this week averaged 2.70 percent with an average 0.6 point, up from last week when it averaged 2.69 percent. A year ago at this time, the 15-year FRM averaged 3.37 percent.
  • 5-year adjustable-rate mortgages (ARM) averaged 2.73 percent this week with an average 0.6 point, up from last week when it averaged 2.72 percent. A year ago, the 5-year ARM averaged 3.06 percent.

Quotes
Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

“Mortgage rates were little changed this holiday week following the employment report for September. Payroll employment increased by 114,000 workers, although manufacturing jobs dipped for the second month in a row. Employment in the prior two months was revised up 86,000 and the unemployment rate fell to 7.8 percent, marking the lowest rate since January 2009.”

Freddie Mac’s survey is the average of loans bought from lenders last week, including discount points. Applicants must pay all closing costs at these rates. No cost loan rates higher.

Follow this link to view today’s MN and WI mortgage interest rates.

 

Mortgage Rates hit all-time record low

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Mortgage Rates Hit All-time Record Lows For Second Consecutive Week

Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing average fixed mortgage rates falling to new all-time record lows for the second consecutive week on mortgage securities purchases by the Federal Reserve and indicators of a weakening economy.

The Federal Reserve’s purchase of long-term fixed mortgage securities allowed the 15-year fixed-rate mortgage at 2.69 percent to fall below the 5-year ARM’s rate at 2.72 percent. The last time the average 15-year fixed was lower than the 5-year ARM was the week ending October 15, 2009.

News Facts

30-year fixed-rate mortgages (FRM) averaged 3.36 percent with an average 0.6 point for the week ending October 4, 2012, down from last week when it averaged 3.40 percent. Last year at this time, the 30-year FRM averaged 3.94 percent.
15-year fixed rate mortgages this week averaged 2.69 percent with an average 0.5 point, down from last week when it averaged 2.73 percent. A year ago at this time, the 15-year FRM averaged 3.26 percent.
5-year adjustable rate mortgages (ARM) averaged 2.72 percent this week with an average 0.6 point, up from last week when it averaged 2.71 percent. A year ago, the 5-year ARM averaged 2.96 percent.

Quotes
Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

“Fixed mortgage rates fell again this week to all-time record lows due to the mortgage securities purchases by the Federal Reserve and indicators of a weakening economy. The final estimate of growth in Gross Domestic Product was revised down to 1.3 percent in the second quarter, representing the slowest growth in a year. In addition, personal incomes rose only 0.1 percent in August, while July’s increase was revised downward. And finally, pending home sales in August fell 2.6 percent, well below the market consensus forecast of a slight increase.”

Freddie Mac’s survey is the average of loans bought from lenders last week, including discount points. Applicants must pay all closing costs at these rates. No cost loan rates higher.

Follow this link to view today’s MN and WI mortgage interest rates.

 

Mortgage Rates hit NEW Record Low

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All-Time Low: 30-Year Fixed-Rate Mortgage Averages 3.40 Percent

Minneapolis, MN:  Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing fixed mortgage rates breaking their previous average record lows helping to keep homebuyer affordability high and refinancing strong to support an already improving housing market. All mortgage products, except the 5-year ARM, averaged new all-time record lows.

News Facts

  • 30-year fixed-rate mortgages averaged 3.40 percent with an average 0.6 point for the week ending September 27, 2012, down from last week when it averaged 3.49 percent. Last year at this time, the 30-year FRM averaged 4.01 percent.
  • 15-year fixed rate mortgages this week averaged 2.73 percent with an average 0.6 point, down from last week when it averaged 2.77 percent. A year ago at this time, the 15-year FRM averaged 3.28 percent.
  • 5-year adjustable-rate mortgages (ARM) averaged 2.71 percent this week with an average 0.6 point, down from last week when it averaged 2.76 percent. A year ago, the 5-year ARM averaged 3.02 percent.

Quotes
Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

“Fixed mortgage rates continued to decline this week, largely due to the Federal Reserve’s purchases of mortgage securities, and should support an already improving housing market. For instance, the S&P/Case-Shiller® 20-city home price index rose 1.2 percent over the 12 months ending in July, reflecting the largest annual increase since August 2010. Moreover, 16 of the cities saw positive growth, led by Phoenix’s 16.6 percent gain. Additionally, new home sales in July and August had the strongest two-month pace since March and April 2010.”

Freddie Mac’s survey is the average of loans bought from lenders last week, including discount points. Applicants must pay all closing costs at these rates. No cost loan rates higher.

Follow this link to view today’s MN and WI mortgage interest rates.

How long will interest rates remain low?

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Minneapolis, MN:  Mortgage interest rates and refinance rates are as of this posting are at record lows. This little jump lower is a direct effect from last weeks announcement by the FED of QE3.

First, understand that the FED does NOT control mortgage interest rates. They only control the Fed Funds Rate, which simply put, is what the banks pay in interest rates to borrow money from the Federal Reserve. Long-term mortgage rates are based on the bond market. The bond market does react to what the Fed says and does, so many people wrongly believe the change in actual rates is because of what the Fed did or didn’t do.

So just what does QE (Quantitative Easing) mean anyway? Well, in short – normally when the economy is struggling the Federal Reserve will reduce short term interest rates to encourage more lending and spending. However, interest rates have already been cut as low as they can go- so what to do? Well, that’s where quantitative easing comes in.

Since the Federal Reserve can essentially create money, it can buy up assets like long-term Treasuries or mortgage-backed securities from commercial banks and other institutions. This pumps money into the economy and reduces long-term interest rates further. When long-term interest rates go down, investors have more incentive to spend their money now. In theory.

Haven’t We Tried This Before?

The central bank has tried using quantitative easing twice before- in November 2008 and again in October 2010 (known as QE1 and QE2). So did it help? There has been plenty of research on this question. The first round of quantitative easing appeared to be effective in preventing the economy from sinking into a giant depression. Economists say this was because everyone realized the Fed would do whatever it takes to avoid deflation. It was essentially a giant confidence boost. The economy stopped sliding and inflation slowly rose. But the effects seemed to dwindle as the years went by. Experts are much more divided on how much QE2 has helped.

In theory, quantitative easing should work in two ways. First, it injects more cash into banks, allowing them to lend more. And second, it lowers interest rates — if the Fed buys up a bunch of mortgage-backed securities, for example, that should make it cheaper to borrow money to buy a house. In practice, interest rates do drop. But it’s hard to figure out whether this translates into a boost in the actual economy.

So now back to how long interest rates will stay low in the near future….

The Federal Reserve has actually done two things to try and improve QE3. First, the Fed said they will keep the rates banks pay for money low until mid-2015. Second, the central bank will buy up $85 billion worth of assets each month between now and the end of the year. But, unlike QE1 or QE2, this new round of purchases will be more open-ended. That’s an important change. Here’s the key bit from the Fed statement:

“If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved”

The purchases will continue until morale improves. What’s more, the Fed noted that it will continue its policy of easy money “for a considerable time after the economic recovery strengthens.”

Mortgage Rates Back To Record Lows

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Minneapolis, MN:  Freddie Mac  today released the results of its Primary Mortgage Market Survey® (PMMS®), showing fixed mortgage rates at or near their all-time record lows helping to keep homebuyer affordability high. The average 30-year fixed rate mortgage matched its all-time record low at 3.49 percent, and the average 15-year fixed fell to a new all-time record low at 2.77 percent.

News Facts

  • 30-year fixed-rate mortgagese averaged 3.49 percent with an average 0.6 point for the week ending September 20, 2012, down from last week when it averaged 3.55 percent. Last year at this time, the 30-year FRM averaged 4.09 percent.
  • 15-year fixed rate mortgages this week averaged 2.77 percent with an average 0.6 point, down from last week when it averaged 2.85 percent. A year ago at this time, the 15-year FRM averaged 3.29 percent.
  • 5-year adjustable rate mortgages (ARM) averaged 2.76 percent this week with an average 0.6 point, up from last week when it averaged 2.72 percent. A year ago, the 5-year ARM averaged 3.02 percent.

Quotes
Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

“Following the Federal Reserve’s announcement of a new bond purchase plan, yields on mortgage-backed securities fell bringing average fixed mortgage rates to their all-time record lows which should aid in the ongoing housing recovery. New construction on one-family homes rebounded in August, rising by 5.5 percent to the fastest pace since April 2010. In addition, existing home sales increased by 7.8 percent in August to its strongest pace since May 2010.”

Freddie Mac’s survey is the average of loans bought from lenders last week, including discount points. Applicants must pay all closing costs at these rates. No cost loan rates higher.

Follow this link to view today’s MN and WI mortgage interest rates.

Fixed Mortgage Rates Ease Going Into The Labor Day Weekend

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Fixed Mortgage Rates Ease Going Into The Labor Day Weekend

Minneapolis, MN:  Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing fixed mortgage rates pulling back and following bond yields lower after gradually moving higher over the past month.

News Facts

  • 30-year fixed-rate mortgages  averaged 3.59 percent with an average 0.6 point for the week ending August 30, 2012, down from last week when it averaged 3.66 percent. Last year at this time, the 30-year FRM averaged 4.22 percent.
  • 15-year fix rate mortgages this week averaged 2.86 percent with an average 0.6 point, down from last week when it averaged 2.89 percent. A year ago at this time, the 15-year FRM averaged 3.39 percent.
  • 5-year adjustable-rate mortgages (ARM) averaged 2.78 percent this week with an average 0.6 point, down from last week when it averaged 2.80 percent. A year ago, the 5-year ARM averaged 2.96 percent.

Quotes

Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

  • “Treasury bond yields fell, allowing mortgage rates to follow, after the release of the July 31st and August 1stminutes of the Federal Reserve’s monetary policy committee. Committee members agreed that economic activity had decelerated more in recent months than they had anticipated at their last meeting in June. Some members even saw room for additional stimulus fairly soon if needed.
  • “Nonetheless, the housing market continued to show improvement over the past few months. New home sales rose 3.6 percent in July matching May’s pace as the strongest month since April 2010.  Similarly, pending existing home sales also rose in July to its highest rate since April 2010. And, the S&P/Case-Shiller® National Home Price Index rose 1.2 percent between the second quarter of 2011 and 2012, reflecting the first annual increase since the second quarter of 2010.”

Freddie Mac’s survey is the average of loans bought from lenders last week, including discount points.

Follow this link to view today’s MN and WI best mortgage interest rates.

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Fixed rates mortgages move higher for third straight week

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Fixed Mortgage Rates Move Higher For Third Consecutive Week

Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing fixed mortgage rates following long-term Treasury yields higher. This marks the third straight week of fixed mortgage rates moving higher.

News Facts

  • 30-year fixed-rate mortgage (FRM) averaged 3.62 percent with an average 0.6 point for the week ending August 16, 2012, up from last week when it averaged 3.59 percent. Last year at this time, the 30-year FRM averaged 4.15 percent.
  • 15-year mortgages this week averaged 2.88 percent with an average 0.6 point, up from last week when it averaged 2.84 percent. A year ago at this time, the 15-year FRM averaged 3.36 percent.
  • 5-year adjustable-rate mortgage (ARM) averaged 2.76 percent this week with an average 0.6 point, down from last week when it averaged 2.77 percent. A year ago, the 5-year ARM averaged 3.08 percent.
  • 1-year ARM averaged 2.69 percent this week with an average 0.4 point, up from last week when it averaged 2.65 percent. At this time last year, the 1-year ARM averaged 2.86 percent.

Quotes

Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

“The latest economic indicators point toward low inflation but gradually stronger economic activity which placed further upward pressure on long-term Treasury yields and, in turn, fixed mortgage rates. For example, inflation remains in check with 12-month growth in the core consumer price index falling for a second month to 2.1 percent in July. At the same time, industrial production rose 0.6 percent in July compared to a 0.1 percent increase in June and retail sales jumped 0.8 percent in July from a 0.7 percent decline in June.”

Freddie Mac’s survey is the average of loans bought from lenders last week, including discount points.

Follow this link to view today’s MN and WI mortgage interest rates.

 

 

95% of refinances are fix rate loans

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More Than 95 Percent Of Refinancing Borrowers Choose Fixed-Rate Mortgages

Thirty Percent Shorten Loan Term When Refinancing

In the second quarter of 2012, fixed-rate loans accounted for more than 95 percent of refinance loans, based on the Freddie Mac Quarterly Product Transition Report released today.

Refinancing borrowers clearly preferred fixed-rate loans, regardless of whether their original loan was an adjustable-rate mortgage (ARM) or a fixed-rate.

News Facts

  • Of borrowers who refinanced during the second quarter, 30 percent reduced their loan term, while 67 percent of borrowers kept the same term as the loan they had paid off.
  • Eighty-one percent of borrowers who had a hybrid ARM chose a fixed-rate loan during the second quarter, the highest share since the second quarter of 2010, while the remaining 19 percent chose to refinance into the same type of product.
  • Borrowers who refinanced under the Home Affordable Refinance Program (HARP) were more likely to take out a long-term, fixed-rate mortgage. For example, 25 percent of HARP borrowers shortened their loan term when they refinanced during the second quarter, compared with 30 percent of borrowers who refinanced outside of HARP. Further, 95 percent of borrowers who were refinancing out of an ARM under the HARP program chose a fixed-rate mortgage. In contrast, borrowers who had an ARM, but did not refinance through HARP, about one-half opted for another hybrid ARM.

Rates for the week

  • “Fixed mortgage rates averaged 3.79 percent for 30-year loans and 3.04 percent for 15-year product during the second quarter in Freddie Mac’s Primary Mortgage Market Survey®, well below long-term averages and the lowest quarterly averages recorded in our survey. The Bureau of Economic Analysis has estimated the average coupon on single-family loans was about 5.0 percent during the second quarter of 2012. It’s no wonder we continue to see strong refinance activity into fixed-rate loans.
  • “Compared to a 30-year fixed-rate mortgage, the interest rate on a 15-year fixed was about three-quarters of a percentage point lower during the second quarter. For borrowers motivated to refinance by low fixed-rates, they could obtain even lower rates by shortening their term. Further, a shorter-term, fully amortizing loan reduces the loan balance faster and builds home equity sooner.”

Freddie Mac’s survey is the average of loans bought from lenders last week, including discount points. Follow this link to view today’s MN and WI mortgage interest rates.