How low will they go? Mortgage rates fall to new 2014 lows

Published 10:07 am Thursday, September 4, 2014

By Jim Buchta

Minneapolis Star Tribune

Global woes could have an upside on the home front.

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Mortgage rates are now at the lowest level of the year, with the average rate for a conforming 30-year, fixed-rate mortgage slipping to 4.15 percent, according to a national survey by HSH.com released Wednesday.

Though it was a modest decline, the rate on the 30-year is now nearly a half percentage point lower than it was at beginning of the year.

“Every little dip does help,” said Keith Gumbinger, HSH.com’s vice president. “Lower mortgage rates can provide a bit of an offset to rising home prices.”

Despite solid economic growth in the U.S., mounting concerns about geopolitical unrest have caused investors to seek the safety and stability of U.S. Treasuries, which influence mortgage rates.

“Troubles around the world continue to be a mortgage shopper’s best friend,” Gumbinger said.

After falling to record lows in late 2012, mortgage rates have been relatively stable. By mid-2013, rates flirted with 5 percent, but they have been virtually flat since late spring when they started slipping.

Recent declines will save buyers and people who want to refinance money but aren’t expected to have a big impact on home sales or refinancing activity.

“Home sales historically follow payroll growth, not rates,” said Alex Stenback, a mortgage banker with Alerus Mortgage in Minnetonka. “And these lows are not low enough to set off another wave of refinancing.”

Still, experts say that when rates are declining home buyers tend to be more confident than when they are rising because of the certainty that a low rate will be waiting for them when they’re ready to buy.

This week, mortgage applications increased 0.2 percent from the previous week, according to the Mortgage Bankers Association.