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Low Mortgage Rates and Refinance Activity

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Freddie Mac reported earlier today: Mortgage Rates Near Record Lows As Home Construction Builds Up Steam

Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing fixed mortgage rates edging slightly lower with the 30-year fixed averaging 3.37 percent, just above its all-time record low of 3.36 percent, and the average 15-year fixed dipping to a new all-time record low at 2.66 percent.

And the MBA reported yesterday that refinance activity decreased last week, but is still near the highest level since early 2009.

Here is a graph comparing mortgage rates from the Freddie Mac Primary Mortgage Market Survey® (PMMS®) and the refinance index from the Mortgage Bankers Association (MBA).

UPDATE: left axis is MBA refinance index, 1990=100.

Mortgage rates and refinance activity Click on graph for larger image.

It usually takes around a 50 bps decline from the previous mortgage rate low to get a huge refinance boom – and that is what we are seeing!

There has also been an increase in refinance activity from borrowers with negative equity and loans owned or guaranteed by Fannie or Freddie (see The HARP Refinance Boom Continued in August) .

Freddie Mac Mortgage Rate Survey The second graph shows the 15 and 30 year fixed rates from the Freddie Mac survey.

The Primary Mortgage Market Survey® started in 1971 (15 year in 1991). The 30 year rate is near a record low for the Freddie Mac survey, and rates for 15 year fixed loans is at a now low this week.




Calculated Risk

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