Mortgage rates remain stable, still low for buyers

Throughout much of 2012, economists have predicted a rise in mortgage rates before the end of the year.

Throughout much of 2012, economists have predicted a rise in mortgage rates before the end of the year. However, a new report from Freddie Mac shows not only have rates hit new record-low levels three times in the last two months, but they remain near these lows, providing potential buyers with high affordability when making the investment.

According to data from the Primary Mortgage Market Survey for the week ending December 6, averages for fixed-rate mortgage options stayed low, while the average for adjustable-rate mortgages continues to near levels seen this time a year ago.

The average rate for 30-year FRMs was 3.34 percent, an increase from 3.32 percent recorded in the last report. When compared to the average from this time a year ago of 3.99 percent, selecting this type of mortgage has remained popular for many first-time buyers who are looking for a lower monthly mortgage payment.

In addition, the average rate for 15-year FRMs was up slightly from the previous week, reaching 2.67 percent from 2.64 percent. Despite the rise, the average remains significantly lower than mortgage records show from this time last year, when the average rate for 15-year FRMs was 3.27 percent.

The GSE's report shows the average rate for 5-year ARMs fell from last week's average of 2.72 percent to 2.69 percent. While the decline may prompt some buyers to consider this mortgage option, it is closing in on last year's average of 2.93 percent. Since ARMs don't provide a steady monthly mortgage payment throughout the entire term of the loan, this option has been less popular with first-time buyers and even those looking to refinance, as noted in the Mortgage Bankers Association's Weekly Mortgage Application Survey.

According to the MBA report for the week ending November 30, application activity was up 4.5 percent from the week before, though ARMs only accounted for 3 percent of total volume received the week after Thanksgiving.

Housing market factors are expected to improve across the board throughout the remainder of the year, while the overall economy is still greatly dependent on the real estate industry for help with improvements.

The vice president and chief economist of Freddie Mac notes recent reports of fixed residential investment has contributed to economic growth throughout the last six quarters, and the housing market will continue to influence the stabilization of the economy throughout 2012.

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