Thursday, March 19, 2015

The Fed's March Move Not Moving the Mortgage Market Much


The Washington Post provides the latest housing statistics. What do they mean?

According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average fell to 3.78 percent with an average 0.6 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was 3.86 percent a week ago and 4.32 percent a year ago.

The 15-year fixed-rate average dropped to 3.06 percent with an average 0.6 point. It was 3.1 percent a week ago and 3.32 percent a year ago.

Hybrid adjustable rate mortgages were mixed. The five-year ARM average slid to 2.97 percent with an average 0.5 point. It was 3.01 percent a week ago and 3.02 percent a year ago.

The one-year ARM average held steady at 2.46 percent with an average 0.4 point.

“Housing starts dropped 17 percent to a seasonally adjusted pace of 897,000 units, below market expectations,” Len Kiefer, Freddie Mac deputy chief economist, said in a statement. “However, housing permits increased 3 percent in February. As we head into spring, home builders remain positive about home sales in the near future although the NAHB Housing Market Index dropped another [two] points to 53 in March.”

Meanwhile rising interest rates have put the brakes on mortgage applications, according to the latest data from the Mortgage Bankers Association.

The market composite index, a measure of total loan application volume, decreased 3.9 percent. The refinance index fell 5 percent, while the purchase index dropped 2 percent.

The refinance share of mortgage activity accounted for 59 percent of all applications.
The consensus seems to be that the Fed will raise rates later this year. This is likely to be a very modest increase in the Fed rate, and doesn't mean that mortgage rates will increase at all. Mortgage rates are only somewhat influenced by the Fed rate. Supply and demand for mortgage capital and the cost of bonds to underwrite mortgages are more critical to market rates for mortgages.

As noted by The Washington Post, mortgage rates have been moving up and down in a very small range for months, even years. There is no clear evidence that a boom in housing sales is anywhere on the horizon. While a shortage of available properties, and the increases in rental prices continue to drive up housing prices in many markets, it has not taken on boom proportions.

As noted in earlier posts on this blog, this is a good time for you to purchase a home if this is a good time for you to purchase a home. In other words, don't rush out and buy to beat a market trend, and don't stay out of the market to try and take advantage of some future pricing or mortgage interest rate advantage. At this time, it seems unlikely that interest rates will go much lower than these historically low rates, but they also don't seem headed higher. Home prices seem likely to trend higher.

As with all prognostications about any market, as soon as the prediction is made, it could be dead wrong. One things we can be certain of: if you are looking for a mortgage on a home for you and your family, or for investment, we can help you find the very best options for your situation.  Call Bill Rayman at Guaranteed Rate today.  424-354-5325

Bill Rayman Home Mortgage

12121 Wilshire Blvd
Suite 350
LA CA 90025


  1. If you have bad credit record and want to refinancing your mortgage with bad credit which offers lowest price quotes online which satisfied consumer’s needs then you can go for bad credit mortgage refinance at

  2. California direct hard money lender. connect with a trust deed investor today and hard money lenders hard money lenders