Pity the poor three-year adjustable rate mortgage consumers, who must feel like they woke up on the wrong side of the balance sheet this morning.
Of the major mortgage rate indexes, three-year ARMs were the only category to rise – to 4.81% from 4.52% for the past week. The other key indexes continued their steady downward trajectory, as mortgage-backed security prices hit four-month highs (mortgage rates usually decline as mortgage-backed security prices rise) thanks to renewed concerns over the U.S. economic recovery, especially in housing.
Here are the weekly numbers, thanks to the BankingMyWay Weekly Mortgage Rate Tracker. Thirty-year fixed-rate mortgages dropped slightly to 5.26% from 5.28%. Fifteen-year fixed-rate mortgages basically held steady for the third week in a row, at 4.72%, while one-year and five-year ARMs dropped once again, to 4.26% from 4.77%% for one-year ARMs, and to 4.47% from 4.5% for five-year ARMs.
Feeding the rate decline was a major disappointment in U.S. housing sales, which triggered a flash stampede out of riskier stocks and into those safe-haven bond categories like U.S. Treasuries. That happened Thursday afternoon, after the release of a National Association of Realtors report showed a 2.7% decline in existing home sales, in stark reversal to the previous month, when existing home sales saw a sharp uptick. So, despite the $8,000 first-time homebuyers credit, and despite low mortgage rates, which have been artificially pumped up by the year-long Federal Reserve program to buy up mortgage paper, home sales just can’t find their footing. That’s a distressing sign not just for banks and the housing market, but for the economy in general.
While there is talk of the U.S. government extending the $8,000 tax credit – it expires Dec. 1 - that hasn’t happened yet. And the Fed’s credit stimulus buyback program, which traded big purchases in mortgage-related debt from financial institutions for lower mortgage rates (below 5% for a good chunk of 2009), is in its closing stages.