Following four consecutive weeks of flagging national home loan interest rate averages, mortgage records again showed a decrease in prices during the week ending May 2.
Freddie Mac reported in its latest Primary Mortgage Market Survey that fixed-rate mortgages (FRMs) are now in record-low territories, after exhibiting continuous declines for the past several weeks. The recent development came as a surprise to some economists, as weaker-than-expected growth was observed during the first business quarter of this year.
"Mortgage rates eased somewhat following the release of the advance estimate of real GDP growth for the first quarter of the year, which rose 2.5 percent but fell short of the market consensus forecast," said Frank Nothaft, vice president and chief economist for Freddie Mac. "The latest GDP report confirmed that the housing sector has become an important contributor to the economic recovery. Residential fixed investment added to overall economic growth over the past eight consecutive quarters and contributed more than 0.3 percentage points in growth over the first three months of this year. Moreover, near record low mortgage rates should further drive the housing market recovery over the near term."
Average 30-year FRMs last week were recorded at 3.35 percent, having moved down from the previous week's level of 3.40 percent. This figure is just above the all-time record low reading for the product, which was set during the week of November 21, 2012 with a average of 3.31 percent. A new record was recently set for 15-year FRMs, as an all-time low level of 2.56 percent was logged for the product after if fell from the preceding week's average of 2.61 percent.
The recent development which saw interest rates again move lower may have improved confidence among individuals considering obtaining residential financing and pursuing homeownership, as well as afforded lending companies an increased sense of safety and soundness in their dealings with borrowers.
Consumers spent more of their money during March
Citizens may be feeling more confident in their financial standings, because of recent increases in personal incomes and rises in expenditures.
The U.S. Department of Commerce announced in its March 2013 Personal Income and Outlays report that Americans experienced a 0.2 percent improvement in personal income last month, as well as disposable income and consumption expenditures.
Personal incomes reportedly grew $30.9 billion during March, with disposable incomes appreciating $20.7 billion and consumption expenditures ticking up $21 billion. While the advancements were less impressive than those seen during February, the recent data could point toward continued economic growth in coming months.