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Japan’s Economy Contracting 1.6 Percent Will Send Mortgage Rates Lower

The Japanese economy was expected to grow 2.1 percent but actually contracted 1.6 percent. News that the Japanese economy fell into a recession will send bond yields lower, which in turn will send mortgage rates in the U.S. lower. Slowing economic growth in Asia and Europe will keep downward pressure on interest rates in the United States in the coming months. Average mortgage rates are higher this week but will move lower in the coming weeks due to lower bond yields.

10 year bond yields will likely fall near 2.00 percent from the current level of 2.34 percent. 10 year bond yields at 2.00 percent will send average 30 year mortgage rates back below 4.00 percent by the end of 2014. 30 year jumbo rates will also fall below 4.00 percent. There won't be any upward pressure on rates until the summer of 2015 when the Federal Reserve starts increasing interest rates.

Mortgage rates today on 30 year conforming loans are averaging 4.08 percent, up from the previous week's average 30 year mortgage rate of 3.99 percent. Rates are higher this week and just above record lows but rates are still low, historically speaking. If you're considering purchasing a home or refinancing your current mortgage, you should do so before rates move higher in the next 6 months.

The best 30 year refinance rates currently available are still below the average rate and still below 4.o0 percent at 3.875 percent with zero points. You can search for lender's rates in all 50 states and the District of Colombia by using our rate tables here: Mortgage Rates Today.

15 year conforming mortgage rates are averaging 3.11 percent, unchanged from last week's average 15 year mortgage rate. The lowest 15 year conforming refinance rates available are at 2.75 percent with 1.375 mortgage rates. The lowest 15 year refinancing rates without points are also below the average at 2.99 percent.

5 year adjustable mortgage rates bucked the uptrend and are lower this week. The current average 5/1 ARM is at 3.22 percent, a decline from the prior week's average 5 year adjustable rate of 3.25 percent.

The best 5 year conforming adjustable rates quoted by lenders are much lower than the average at 2.25 percent with 1.10 mortgage points. The lowest 5 year conforming refi rate without points are also below the average at 2.625 percent.

Current mortgage rates on 30 year jumbo loans are averaging 4.20 percent, down 2 basis points from last week's average jumbo mortgage rate of 4.22 percent. The best 30 year jumbo refinance rates available from lenders are at 3.625 percent with 0.63 points and at 3.75 percent with no points.

15 year jumbo rates are also lower this week averaging 3.81 percent, down from last week's average rate of 3.86 percent. The lowest 15 year jumbo refinance rates available are at 3.125 percent with 0.63 points and at 3.375 percent with no mortgage points.

Today's mortgage rates on 5 year jumbo loans are averaging 3.47 percent, unchanged from last week's average 5 year jumbo rate. The best 5 year adjustable jumbo rates currently available are at 2.625 percent with 0.75 mortgage points. The lowest 5 year jumbo adjustable rates without points are at 2.75 percent.
Author: Brian McKay
November 17th, 2014