Rates on the most popular types of mortgages hardly moved this week, according to HSH.com's Weekly Mortgage Rates Radar, as the average rate for conforming 30-year fixed-rate mortgages (FRMs) stayed the same at 4.61 percent. Conforming 5/1 Hybrid ARM rates increased by just three basis points, closing the Wednesday-to-Tuesday wraparound weekly survey at an average of 3.33 percent.
"Mortgage rates have been steady to slightly firmer in recent weeks, but remain in familiar territory," said Keith Gumbinger, vice president of HSH.com. "The warmer economy and less-aggressive Federal Reserve are keeping rates pretty firm at the moment. However, there are issues besides interest rates which will affect homebuyers and refinancers as we enter 2014, and those come into play starting this Friday."
Rules written under Dodd-Frank to address problems revealed in the financial market collapse of several years ago take effect Jan. 10. These changes include the new Ability-to-Repay (ATR) and Qualified Mortgage (QM) rules. Given the tight underwriting standards already in place in the market, they may not do much to further restrict credit availability, but don't do much to enhance it either.
"Lenders have been deeply scrutinizing borrower applications for several years, requiring plenty of documentation and doing their best to make certain that borrowers can afford the loan for which they've applied," added Gumbinger. "Until Friday, that's been a kind of market-enforced discipline, and the implementation of ATR is more of a formalization, so it shouldn't disturb things too much, except perhaps slowing down the application-to-closing process somewhat."
Gumbinger added, "The QM rule, which puts into place certain strictures, such as a maximum debt-to-income ratio, fee limits and other items, may see some borrowers with a lessened availability of credit, higher rates or both, as lenders look across their markets and try to determine whether they are willing to make mortgages which may expose them to greater risks of loss or liability in the future."
Average mortgage rates and points for conforming residential mortgages for the week ending January 7, according to HSH.com:
Conforming 30-year fixed-rate mortgage
►Average rate: 4.61 percent
►Average points: 0.19
Conforming 5/1-year adjustable-rate mortgage
►Average rate: 3.33 percent
►Average points: 0.11
Average mortgage rates and points for conforming residential mortgages for the previous week ending December 30 were, according to HSH.com:
Conforming 30-year fixed-rate mortgage
►Average Rate: 4.61 percent
►Average Points: 0.16
Conforming 5/1-year adjustable-rate mortgage
►Average Rate: 3.30 percent
►Average Points: 0.10
