Mortgage Rates Fall

[Emily Smith]

Mortgage rates changed course last week with average 30-year FRMs falling by as many as ten basis points to close at 6.35%, and average 5/1 ARMs slipping by six basis points, to close at 6.18%.

This reversal in average mortgage rates cannot be taken as tangible indication of a downward trend. The main reason being that factors that contributed to an increase in mortgage rates in the first place, such as wage-induced inflation and employment patterns, remain largely unchanged. One other factor that could have influenced mortgage rates in the past week may have been the veering of investments from stocks into bonds.

Inflationary pressures still continue to cast its shadow on the economy. That inventory stocks are gradually getting depleted and needs to be restocked, spells more activity for the manufacturing sector. Further activity in the housing sector will also depend on existing inventories and trend in mortgage rates. In the meanwhile, surveys indicate that nearly half of all mortgage applications continue to be for refinancing.

Cheers
Rob Thomos