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Residential financing rates continue downward trend

Posted on Thursday, May 22, 2014 at 10:53:46 AM

It is hard for affordability and homebuying conditions to improve any more than they already have, thanks to historically low residential financing rates and a continued trend downward.

This is great news for potential homebuyers across the country. According to Freddie Mac, mortgage rates are close to a seven-month low, with decreases reported for the fourth week in a row. The 30-year fixed-rate mortgage averaged only 4.14 percent for the week ending May 22, compared to last week's 4.20 percent. The 15-year FRM averaged 3.25 percent during that time, down from 3.29 percent.

"Mortgage rates continued to decline this week as industrial production slipped by 0.6 percent in April, below the market consensus forecast," stated Frank Nothaft, vice president and chief economist at Freddie Mac. "Meanwhile, housing starts jumped 13 percent in April to a seasonally adjusted annual rate of 1,072,000 units, well above expectations. Permits rose to a seasonally adjusted annual rate of 1,080,000 in April, also above expectations."

In addition, the Mortgage Bankers Association reported an uptick in the number of residential financing refinance applications. The Market Composite Index, which measures loan application volume, grew 0.9 percent on a weekly basis in mid-May. The refinance share of mortgage activity ticked up to 52 percent of the total number of applications.