According to Freddie Mac’s latest Primary Mortgage Market Survey, 30-year fixed-rate mortgage rates averaged 3.94 percent with an average 0.8 point for the week ending October 6, 2011, down from 4.01 percent last week and versus 4.27 percent a year ago.
At the same time, mortgage applications to purchase homes in the U.S. dropped 1.7 percent last week (refinancing activity fell 5.2 percent), down 12.1 percent on a year-over-year basis according to the Mortgage Bankers Association.
30-Year Fixed Mortgage Rate Falls Below 4 Percent [Freddie Mac]
Mortgage Applications, except Government Refinances, Decrease [mbaa.org]

13 thoughts on “30-Year Mortgage Rates Fall Below 4 Percent And…Activity Drops”
  1. as we’ve talked about before, people purchse a house primarily based on
    -income
    -savings
    -credit
    The most important aspects for homebuying (excluding the absolutely ridiculous NINJA loan period) are income and savings.
    American income has been stagnant for some time, and many Americans simply don’t feel secure in their future earnings. How could they as we continue the Great Recession? Thus, housing will be constrained by lack of income.
    Savings and investment have been decimated by the incompetence of our financial and political leaders. Equities unsurprisingly going towards double dip and ZIRP affect future returns on savings/investments, which means less money available to purchase assets.
    As for credit, although the Federal Reserve is flooding the system with liquidity and some of this is improving rates of credit to select buyers, the problem of course is that there is still severely limited ACCESS to credit to much of the American population. Many Americans who qualify for these rates have already bought and aren’t interested in buying again. Others are interested in buying, but can’t qualify.
    years ago we predicted the “liquidity trap”, also called “the Fed pushing on a string”, and that is where we are now.
    it would be a surprise to me on a national level to see housing improve significantly with ever increasing unemployment, falling wages, ZIRP, equity market correction, and continued zombie banks.
    Locally: the SF economy has weathered the storm relatively well although in a bifurcated manner (tech workers doing very well, the rest of SF not so much). it seems to be the continued Brazilification of America.
    The lower mortgage rates will help a small segment of the population, but not many.
    there are those who don’t need credit, they will buy multimillion dollar properties either way. Not sure it’ll affect things too much there.
    It may help the upper mid to middle market if those prospective buyers can get credit given the change in jumbo conforming limits.

  2. Anybody know what the mortgage rates were in Japan? If we’re going to zero rates, that might be a decent indicator.

  3. Low and lower interest rates are great. They should help drive property values for you there in S.F. just as they are in Austin. But still I’m surprised the purchasing activity isn’t more than it is. With rates unable to go any lower, it’s GOT to be the best time to buy. Time to get off the fence, right?

  4. What lower interest rates? A $700K loan that could be had for 4.18% last month is at 4.76% now. That raised the monthly mortgage payment by 14%.
    Jumbos that were at 4.78 a month ago are about the same: 0.02 basis points lower to 4.76. That means the spread between Jumbo and conforming is going UP, not down, in spite of anon.ed’s assertion that he heard from someone who heard from someone who heard from someone’s cousin that banks were more interested in making these loans.
    15 year fixed conforming and jumbo rates are up. A 5/1 arm is about the same for both conforming and jumbo.
    The economy is sinking, market is sinking, gold and oil are way down, IPOs are almost non existent, and interest rates, except for the cheapest homes for the most qualified buyers, haven’t budged. For many people, they are higher.
    So I’m not surprised that mortgage volumes are sinking. 189 new listings last week, 42 sales. The lower loan limits seemed to have had a greater impact than lower rates for one type of loan (30 year conforming).

  5. @tipster: I just closed a $676k 30-year fixed at 4.125% with 80% LTV, LAST FRIDAY, no points no fees.
    But, yes, other than the contradictory *actual data* I just cited, your ideas are great.

  6. “Jumbos that were at 4.78 a month ago are about the same: 0.02 basis points lower to 4.76. That means the spread between Jumbo and conforming is going UP, not down, in spite of anon.ed’s assertion that he heard from someone who heard from someone who heard from someone’s cousin that banks were more interested in making these loans”
    Gold now. Citing a dip in jumbo as evidence. Talk about pretzel logic. You’re on one nowadays man.
    Here: http://articles.latimes.com/2011/jul/10/business/la-fi-harney-20110710
    Not that you care about things that actual happen, in life, or especially real estate.
    I don’t understand why you’re so bent on alienating everyone right now. I mean every side of the aisle: the person in line behind you, the cashier who rings up your seven frozen TV dinners weekly, and everybody else nowadays. The best thing for you right now would be if the ed. deleted every single post you’re making. You LOOOVE this site, dude. WHy the auto-hate words that are lousy even with regard to your own standardless record?

  7. “189 new listings last week, 42 sales”
    I keeop hearing these reports that listings are way in excess of sales. However, I used to when inventory was falling, both MOM and YOY so didn;t hold too much weight in them.
    It would be great to see the inventory position again though..not sure what happened to the bi-monthly report herte, and my requests for where it might be, and why it no longer is posted are typically removed from the site.
    Oh well….

  8. I was just quoted 4.37% on a 500K 30 year fixed refi with no points…but $3300 in fees. Sounds in line with Tipster’s post – but based on Jimmy’s post, perhaps I should keep shopping? Interested to hear what other people are getting for quotes in recent days.

  9. I was just quoted 4.25% to refi my condo balance of $335k on a thirty year fixed. 4.00% on a 7 year ARM.
    The challenge for me is 2 years of recent unemployment (I’m now back at work). So despite a 790 FICO, perfect payment record for the last 3 years on my current mortgage, and 6 figures of cash on hand, my broker can only steer me to a limited number of lenders. I’ve had to write detailed letters about what I did for 2 years.
    So I can only imagine what it’s like for other people who don’t have savings or good credit. This, to me, is the heart of the problem – millions of people who will *never* meet the current underwriting requirements.

  10. Rates are now all up from a month ago, except for a 1 year adjustable, which is about the same.
    Lenders just don’t want to lock in low rates for 30 years.

  11. “Lenders just don’t want to lock in low rates for 30 years.”
    Hey! They’re going to have to earn a lot of money to buy all those dud loans back from the Fed at face value.

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