Both 30 Year Fixed and 5 Year ARM mortgage rates for California Refinance and Home Purchase are at their lowest level for 2011 after declining for the fourth consecutive week. Freddie Mac reported last week that the 30-year fixed-rate averaged 4.63%, 5 Year ARM averaged 3.41% and the 15-year fixed averaged 3.82%.
30-year fixed-rate mortgage averaged 4.63 percent with an average 0.7 point for the week ending May 12, 2011, down from last week when it averaged 4.71 percent. 5-year adjustable-rate mortgage (ARM) averaged 3.41 percent this week, with an average 0.6 point, down from last week when it averaged 3.47 percent.>
Note that these rates are for conforming loan amounts $417,000 or lower. Rates for loan amounts between $417,001 to $729,750 are usually .125% to .25% higher.
What is causing these low California Mortgage Rates?
Weaker economic data reports in last 2-3 weeks reduced Treasury bond yields and allowed mortgage rates to drift lower for the fourth consecutive week. This is what happened to some major economic data:
- The unemployment rate rose to 9.0 percent from 8.8 percent in March and was the highest reading since January. In addition, wages grew by only 0.1 percent, which was below the market consensus forecast.
- Real economic growth in the first quarter fell short of the market consensus forecast and represented the slowest pace since the second quarter of 2010.
- Both the manufacturing and service sectors exhibited growth at a slower rate in April.
Outlook for California Mortgage Rates:
There are no Treasury auctions this week, back to economic reports that will set the pace. Although interest rates are seemingly stuck at the present levels, the outlook remains positive for interest rates staying low as long as the equity markets, the dollar and commodity prices trade soft.
We expect most markets to be volatile this week with prices of interest rates, stocks, and all commodities swinging day to day. If however, crude oil resumes its run higher the bond and mortgage markets will likely struggle and come under some selling pressure. That could mean slight uptick in California mortgage rates.
If you are looking buy or Refinance a California home, complete the rate quote request on the sidebar or contact me at 408.615.0655 or [email protected]