Mortgage Trends This Week: Aug. 23

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We’re finally seeing some upward movement in mortgage rates, especially at the top end, where the 30-year mortgage rate crept to 4.663%, up from 4.529% last week, as measured by the BankingMyWay Weekly Mortgage Rate tracker http://www.bankingmyway.com/real-estate/mortgages.

One- and three-year adjustable rate mortgages also inched upward, as downward pressures eased on mortgage rates for the first time this summer (actually, since April 2010).

Rates have fallen because of weak economic indicators, which really haven’t grown any stronger in the past week (especially with jobless claims, which rose over the benchmark 500,000 level last week). So it’s probable that rates are either taking a breather before continuing their descent, or we’ve reached a bottom where rates will remain until the economic landscape crystallizes.

A big reason rates are remaining low is the absence of signs of inflation. Economists worry about the impact inflation could have on our economic recovery. They believe that as inflation raises the cost of living, central bankers must raise interest rates to keep inflation in check.

But that’s not the case right now, as economists don’t even see a glimpse of inflation on the economic horizon.

“Investors in long-term bonds appear very confident that inflation will remain in check, and as a result long-term fixed mortgage rates have continued to fall,” Amy Crews Cutts, deputy chief economist for Freddie Mac, said in a statement on Aug. 19. “This week marks the ninth straight week in the Primary Mortgage Survey that 30-year-fixed mortgage rates have met or set a new record low.”

The slight shift upward in mortgage rates comes as at time when homeowners are more pessimistic than ever about the U.S. housing market. According to the most recent Zillow.com Homeowner Confidence Survey, 28% of U.S. homeowners believe home prices in their communities will fall by the end of 2010. Only 20% thought the same thing back in January, Zillow reports.

"As homeowners have been so inundated recently with news of declining home sales post-tax credit, it's no surprise that they would become more pessimistic about the future of home values," Stan Humphries, Zillow’s chief economist, said. "Homeowners have become much more responsive to current market conditions than they were just two years ago, when a more typical reaction was denial.”

So, it’s a good news/bad news week for homeowners. Rates have risen  - at least for one week, anyway – but more owners believe the value of their homes will decline rather than rise.

With this in mind, let’s look at this week’s mortgage numbers, as measured by the BankingMyWay Weekly Mortgage Rate Tracker.


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Description                             This Week                   Last Week

One-Year ARM                       3.453%                        3.886%
Three-Year ARM                     4.034%                        3.864%
Five-Year ARM                       3.569%                        3.614%
15-Year Mortgage                    4.015%                        4.033%
30-Year Mortgage                    4.663%                        4.529%

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It’s much too early to say the mortgage rate market has hit bottom. But if you feel antsy about it, the best time to lock in is right now. To get those low mortgage rates before they really do rise significantly, visit BankingMyWay’s Mortgage Rate Search http://www.bankingmyway.com/ratesearch/mortgages?puc=section. Week-to-week, it’s your best bet for finding the best mortgage rate deal possible.

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at BankingMyWay.com.

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