Economic Uncertainty Effects Rates this Week

Rates on 30-year U.S. mortgages dropped sharply this week, falling to the lowest level in five weeks.Mortgage giant Freddie Mac reported Thursday that 30-year, fixed-rate mortgages averaged 6.04 percent this week, down from 6.46 percent last week. The sharp decline pushed 30-year rates down to the lowest level since they stood at 5.78 percent the week of Sept. 18.

Analysts attributed the decrease to an easing of inflation concerns, which now have been replaced with rising worries that the country could be headed for a prolonged recession. Interest rates generally fall in periods of economic weakness.

Morgage Rates Highest in 8 Weeks

Rates on 30-year mortgages jumped to the highest level in eight weeks, squeezing some potential homebuyers out of the market, and reflecting how nervous lenders remain despite the massive global intervention in the credit markets. Mortgage giant Freddie Mac reported Thursday that 30-year, fixed-rate mortgages averaged 6.46 percent this week, up from 5.94 percent last week.

It marked the third increase out of the past four weeks and pushed rates to the highest level since Aug. 21.In plain dollars and cents, last week’s increase means a homebuyer would spend about $55 more a month to buy the U.S. median-priced home of $203,100 with a 20 percent downpayment.

September Statistics

After a few months of trending upward, sales of single family houses dipped 11.04% in September compared with August but remained well ahead of last year's level (up, 30.59%). This sales activity again was driven by a steady downward march of price. Prices were down 8.28% for the month and 15.55% down year-to-date.

The single family home inventory bucks the sales trend by steadily declining. This could be explained by reports of 'Seller Fatigue' where property owners are electing to remain out of the current weak market.

Average Interest Rates Lower

Freddie Mac, the mortgage company, reported Thursday that 30-year, fixed-rate mortgages averaged 5.94 percent this week, down from 6.10 percent last week. It marked the first decline since rates fell on Sept. 18 to 5.78 percent, a seven-month low.

Financial markets have been turbulent in recent weeks as investors have flocked to the safety of Treasury securities, sending those yields down sharply while rates on other types of corporate bonds have been pushed higher by growing concerns about whether the bonds will be repaid. Those crosscurrents have been reflected in mortgage rates, which also have been on a rollercoaster, hitting a high for the year of 6.63 percent in late July and then dropping below 6 percent in mid-September.

“Longer-term mortgage rates fell for the first time in three weeks, roughly following bond market yields,” said Frank Nothaft, chief economist for Freddie Mac.

Mortgage Rates....

Rates on 30-year mortgages have risen for a second straight week, climbing to the highest level in a month.Freddie Mac, the mortgage company, reported Thursday that 30-year, fixed-rate mortgages averaged 6.10 percent this week, up slightly from 6.09 percent last week.

It was the highest level since 30-year mortgages averaged 6.35 percent for the week ending Sept. 4. Financial markets have been turbulent in recent weeks as demand for safe-haven Treasury securities has pushed those yields down sharply while rates on other types of corporate bonds have been pushed higher by growing concerns about whether the bonds will be repaid. Those crosscurrents have been reflected in mortgage rates, which also have been on a rollercoaster, hitting a high for the year of 6.63 percent in late July and then dropping below 6 percent in mid-September.

The recent turmoil in credit markets has pushed those rates up from a seven-month low of 5.78 percent on Sept. 18, to above 6 percent for the past two weeks.