Lower rates are expected to continue as experts suspect the labor market will show little improvement.
Chicago, IL (PRWEB) August 13, 2015
Lenders like The Federal Savings Bank have watched as fixed-rate mortgages took a tumble for the week ending August 6, according to Freddie Mac's Primary Mortgage Market Survey.
Interest rates remain below 4 percent
The survey indicated 30-year FRMs decreased from the previous week. In addition, the average is lower when compared on a year-over-year basis.
The average 15-year FRM also decreased when compared to the previous week and remains well below the average seen last year at this time.
Adjustable-rate mortgages remain relatively similar
According to the survey, the average 1-year Treasury-indexed ARM increased slightly while the 5-year Treasury-indexed hybrid ARM averaged the same when compared on a week-over-week basis.
Lower rates are expected to continue as experts suspect the labor market will show little improvement.
"All eyes are on the upcoming July employment report, as the Fed has made it clear developments in the labor market will affect the timing of any potential rate hike," noted Sean Becketti, Freddie Mac's chief economist. "But early signals indicate Friday's employment report will not look so good."
Lower interest rates boost mortgage applications
The historically low rates may have encouraged the spike in mortgage applications reported by the Mortgage Bankers Association. Total applications rose 4.7 percent when compared on a week-over-week basis.
Refinancing activity increased for the second week in a row. In fact, the refinance share made up 51.3 percent of all mortgage applications. This is up from the 50.6% share seen last week.
The ARM share of all mortgage applications also ticked up from the previous week to 6.8 percent and loan applications through the Federal Housing Administration jumped up from 13.7 to 13.8 percent.
"Despite recent concerns about the economy, both purchase and refinance applications increased strongly in response to lower interest rates last week," Lynn Fisher, MBA's vice president of research and economics, stated. "Refinance activity was the highest since May when rates were last at this level. The increase in purchase activity was also notable for this time of year, up 23 percent relative to a year ago."
Low interest rates provide better access to home loans to interested buyers. This is especially beneficial for first-time home buyers looking to purchase their first homes.
In addition, current homeowners likely want to take advantage of the low rates and ultimately the savings they will accrue over the life of their loans.
Contact the Federal Savings Bank, a veteran owned bank, to learn more about mortgages.