Friday, February 5, 2010

Mortgage Rates Remain Low and Housing Loan Standards Are Starting To Relax

Freddie Mac released the results of its Primary Mortgage Market Survey yesterday. The 30-year fixed-rate mortgage (FRM) averaged 5.01 percent for the week ending February 4, 2010, up from last week when it averaged 4.98 percent. On February 4, 2009 the 30-year FRM averaged 5.25 percent which was almost .25% higher.

The 15-year FRM this week averaged 4.40 percent, up slightly from last week when it averaged 4.39 percent. On February 4, 2009, the 15-year FRM averaged 4.92 percent. The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.27 percent this week, up from last week when it averaged 4.25 percent. On February 4, 2009, the 5-year ARM averaged 5.26 percent which is almost 1%.

Mortgage rates have remained relatively stable amid news of a strengthening housing market. Residential fixed investment rose for two consecutive quarters over the last half of 2009 following a steady quarterly decline since the beginning of 2006. From the lower mortgage rate numbers above and a strengthening housing market you can see a trend for the better developing in the housing market. Also recently mortgage applications for home purchases jumped 10 percent at the end of January, according to figures from the Mortgage Bankers Association.

Even more encouraging news came from the Federal Reserve’s Senior Loan Officer Opinion Survey, which reported that banks have generally stopped tightening standards on most types of loans in the fourth quarter of 2009, with commercial real estate as the exception. However, banks have yet to unwind the tightening that occurred over the last two years. Moreover, fewer banks expected credit quality to deteriorate over 2010 which is good news for the housing market.

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