Mortgage rates are still testing lows last seen in early December 2010. In fact, Freddie Mac’s Primary Mortgage Market Survey (published weekly, on Thursdays) today showed the average rate dropped for the 6th straight week:
“Fixed mortgage rates eased slightly for the sixth consecutive week amid reports of slower economic activity.. said Frank Nothaft, vice president and chief economist of Freddie Mac, in a news release.”
Great news, for sure – lower rates to compliment some of the great deals out there is something prospective homebuyers can cheer about.
That said, the “6 consecutive” weeks of falling rates statement can be a little misleading, so don’t start popping any champagne corks just yet.
The reality is, mortgage rates have been available at this level, albeit with some volatility in between, since about May 5th, so much of the “New Lows!!” press you will see in the coming days is more noise than news.
But, whether news or noise, there’s an opportunity here to make a point:
Understanding exactly what Freddie Mac is reporting will help you apply this information to your own quest for a home loan.
There’s lots of info on Freddie’s methodology here, so I won’t rehash the entirety, but the most important thing to understand is that the PMMS numbers are a weekly average of rates offered by lenders surveyed by Freddie Mac.
So while it is a good gauge of the general direction and position of interest rates, it is subject to some inherent flaws:
- The rates reported are compiled between Monday and Wednesday. But because rates change daily, often multiple times, by the time the report hits the press, the rates are already expired. Actual rates may be higher or lower.
- They generally make best-case assumptions about the transaction. Mortgage rates are not one-size-fits-all. There are dozens of variables. Actual rates will always vary from borrower to borrower, property to property, and transaction to transaction.
- The Survey picks up minor, incremental improvements that are not really available to borrowers. Mortgage rates are only available in 1/8th% increments, so while a change from 4.61% to 4.6% will show improvement, and may even be a ‘New Low!’ this is not the sort of improvement that borrowers will normally see reflected in their actual rate or costs.
Want to know exactly what rate you can get? The only way to do this is the old fashioned way – submit an application with a lender or three and get a quote.