Mortgage interest rates were essentially flat between this week and last, as good economic news kept the markets calm, according to the Freddie Mac Primary Mortgage Market Survey.
Meanwhile, a separate Freddie Mac study found that a significant number of borrowers are taking advantage of the lower rates to shorten their term when they refinance.
Frank Nothaft, vice president and chief economist at Freddie Mac, said, "Mortgage rates were little changed this week just as the economy is showing potential for further gains in the near term. Retail sales rose for the fifth straight month in October and beat the market consensus forecast.
"Meanwhile, consumer confidence rose for the third consecutive month in early November to the highest reading since June, according to the University of Michigan's sentiment index. Lastly, homebuilder confidence exhibited a back-to-back monthly increase in November to the strongest level since May 2010, based on the NAHB/Wells Fargo Housing Market Index."
The 30-year fixed-rate mortgage averaged 4% for the week ended Nov. 17, up one basis point. The 15-year FRM also was up 1 BP to 3.31%, while the 5-year Treasury-indexed hybrid adjustable-rate mortgage was down by 1 BP to 2.97%.
Average rates for the 1-year Treasury-indexed ARM rose 3 BPs to 2.98%.
The 15-year FRM is proving to be a popular product. During the third quarter, 40% of borrowers who paid off a 30-year fixed-rate loan opted to move into a 15- or 20-year loan, the highest such share since the second quarter of 2003.
"Compared to a 30-year FRM, the interest rate on a 15-year fixed was about 0.8 percentage points lower during the third quarter. For borrowers motivated to refinance by low fixed rates, they could obtain even lower rates by shortening their term," Nothaft said.
