January 10, 2013
Mortgage Rates Rose, Fell as
Economic Optimism Waxed, Waned in
2012
When investors
feel good about prospects for the
economy, mortgage rates rise. When
they feel more pessimistic, mortgage
rates fall. And so it went in 2012.
In historic terms,
rates for 30-year and 15-year
fixed-rate mortgages were at
all-time lows last year. Even so,
throughout the year, average rates
for a 30-year fixed-rate mortgage
fluctuated by more than .75
percentage points, and rates for a
15-year fixed rate mortgage
fluctuated by more than .5
percentage points, according
to MortgageMarvel.com, an online,
multilender mortgage-shopping
website that allows consumers to
compare accurate, real-time mortgage
offers from a variety of lenders.
Here are the average, high and low
rates for 30 and 15-year fixed-rate
loans during 2012:
The average rate
for a 30-year fixed-rate mortgage in
2012 was 3.739 percent, with the
highest rate at 4.179 percent and
the lowest rate at 3.416 percent.
The average rate for a 15-year
fixed-rate mortgage in 2012 was
3.051 percent, with the highest rate
at 3.394 percent and the lowest rate
at 2.619 percent.
On a $250,000
loan, a consumer could have saved
nearly $40,000 in interest by
avoiding the highest rate and
obtaining the lowest rate on a
30-year fixed-rate loan. For a
15-year fixed-rate loan, the savings
would have been about $12,500.
We hit the highest
rate in March, and that makes sense
with what was happening in the
economy at the time, said Rick
Allen, chief operating officer of
Mortgage Marvel. In March, the
economy was showing some strength.
The Dow Jones Industrial Average
closed at 13,000 points for the
first time since May 2008. The S&P
500 had gained almost 9 percent
since the start of 2012. Retailers
had a strong month in February. The
gross domestic product had expanded
in the fourth quarter of 2011 at an
annual rate of 3 percent. Investors
were moving more money into stocks,
causing a reduced demand for other
instruments like bonds and Treasury
notes, which caused prices on these
safer investments to go down and
their yields or rates to go up.
Mortgage rates also rise when
interest rates on these types of
investments rise.
On the other hand,
when the economic outlook is poor,
investors flee to safety, driving
the price up and the yield down on
safer investments. For much of the
year after March, investors worried
over such issues as the fiscal
cliff, continuing problems in Europe
and an economic slowdown in China.
As a result, interest rates on safe
investments fell, and mortgage rates
followed suit.
In regard to 2013,
the Mortgage Bankers Association is
forecasting that the 30-year fixed
rate will remain below 4 percent
through the first half of the year
and rise to about 4.4 percent by the
end of the year. Housing activity is
picking up, Allen noted, and as the
economy and consumer confidence pick
up, rates should start to rise.
Mortgage Marvel
pulls real-time rates every
day directly from a database of more
than 1,000 national, regional, and
local banks and credit unions across
the country. As a result, the
company has the mortgage industrys
most accurate, timely and detailed
information about rates. All rates
displayed are with zero points to
provide a true indication of the
cost and avoid the confusion of
comparing rates with different
levels of discount points.
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