Mortgage Refinance Rates GraphHypothecary Refinancing Rates Chart
Mortgages interest rates in comparison to ten-year treasury returns and refinancing activities
Fréddie Mac .... published the results of his Primary Mortgage Market Survey (PMMS®), which shows that for the second successive weeks moving amid recent news that headline rates remain low, mortgage interest rates have fallen slightly..... The 30-year fixed-rate mortgage (FRM) was 4.39 per cent on avarage and 0.7 points on avarage for the period ending 23 January 2014, compared with 4.41 per cent last year.
One year ago at that point in the year, the 30-year-old FRM stood at an annual mean of 3.42 per cent. 15-year-old FRM this weeks averages 3.44 per cent with an averaging score of 0.7 points compared to last weeks when it averages 3.45 per cent. One year ago, the 15-year-old FRM stood at an annual mean of 2.71 per cent at that point in the year. Please click on the graphic to enlarge it.
The chart shows the Freddie Mac Primary Mortgage Market Survey® 30-year benchmark interest rates versus the MBA Funding Index. Refinancing index fell strongly last year as mortgage rates rose (activity up 67% from May last year). This second chart shows the correlation between the 10 year Treasury yields and the 30 year mortgage rates from the Freddie Mac poll.
At present, the 10-year treasury return is 2.72% and the 30-year mortgage interest is 4.39% (according to Freddie Mac). On the basis of the graph, the 30-year mortgage interest rates (Freddie Mac survey) would be around 5%, while 10-year treasury returns would be around 3.33% (unlikely in the near term).
Hint: The amber mark is the actual (last week) relation.
Here is why mortgage refinancing is going to increase lending activities - but probably it will not be booming.
Treasury yields fell to 1.875% after today's news from the Fed, another all-time low. While the Fed will not prolong maturity, the Fed will also "reinvest capital out of its portfolio of agent debts and agent mortgage papers into agent mortgage papers", which is likely to depress mortgage rates.
It is quite possible to have a 3-handle for a compliant 30-year fixed-rate mortgage. At 15 September, the 30-year interest fix was 4.09% for compliant lending according to the Freddie MacWeekly Primary Mortgage Market Survey®. Below are a few charts - the first compares 30-year mortgage rates with the MBA refinancing index (on a month-by-month basis), and the second chart is the week-on-week comparison of the refinancing index with the 10-year return.
Please click on the graphic to get a bigger picture in the graphic album. The chart shows the refinancing index of the MBA (monthly average) and the 30-year interest fix from the Freddie Mac Primary Mortgage Market Survey®. The mortgage interest rates are currently at a all-time low of the last 40 years and are expected to continue to decline.
There is usually around 50 basis points drop from the prior low mortgage rates to a giant refinancing boom low - and prices might not drop that far - but there should be an increased refinancing activity in the coming few week. Please note: 30-year mortgage rates were 4.23% in October 2010.
In the second chart, refinancing activities are compared with ten-year returns. Ten-year returns are below the levels of the subprime mortgage market. I suspect that we see 30-year mortgage rates below 4% and a significant recovery in mortgage refinancing activities - although probably not the refinancing levels that occurred in 2003 or 2009.