Higher home prices may have some potential buyers waiting to make the investment, but mortgage rates continue to offer high affordability.
The latest Primary Mortgage Market Survey from Freddie Mac shows fixed mortgage rates remained near record lows for the week ending November 8.
The average rate for 30-year fixed rate mortgages was 3.4 percent, up from the previous week when it averaged 3.39 percent. This time last year, the average rate was 3.99 percent, indicating a significantly more affordable housing market throughout much of the country. The record low of 3.36 percent was reached the first week of October, and rates have lingered near this level ever since.
"Mortgage rates remained near record lows following the employment report for October," said Frank Nothaft, vice president and chief economist of Freddie Mac. "The economy added 171,000 jobs, above the market consensus forecast, and the two prior months were revised up a combined 84,000. The Labor Department also reported that the unemployment rate ticked up to 7.9 percent and that average hourly wages were unchanged."
Additionally, the average rate for 15-year FRMs slipped to 2.69 percent from 2.7 percent the week before. A year ago, the average 15-year FRM rate was 3.3 percent. This remains a popular mortgage option for buyers who don't mind paying a higher monthly mortgage rate instead of more interest over time. Many homeowners have also been selecting this when refinancing.
The average rate for 5-year adjustable-rate mortgage was 2.73 percent, down from the previous week when it averaged 2.74 percent. While other rates are notably lower when compared to the same time last year, the average rate for 5-year ARMs is well below its rate a year earlier of 2.98 percent.
Jobs market showing signs of life
When mortgage rates took an unexpected fall, many industry experts credited this the stagnant economy. Despite improvements to the housing market, factors including unemployment and job creation have kept the economy from performing at pre-recession levels.
Jobless claims were one positive piece of economic data at the beginning of November. Unemployment claims dropped to 355,000 during the week ending November 3. However, this was attributed to the effects Hurricane Sandy had on the East Coast.
The nation's jobs situation has made gains this year, though, and some economists predict better numbers will come at the start of 2013.