Mortgage rates dropped this week following Tuesday’s Fed announcement that its 13-month-long interest rate hikes may be winding down, according to surveys conducted by Freddie Mac and Bankrate.com.
In Freddie Mac’s survey, the 30-year fixed-rate mortgage averaged 6.3 percent for the week ended today, down from last week’s average of 6.32 percent. The average for the 15-year fixed-rate mortgage is 5.85 percent, down from last week’s average of 5.87 percent. Points on both the 30- and 15-year averaged 0.5.
The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 5.77 percent this week, with an average 0.5 point, down slightly from last week when it averaged 5.78 percent. The one-year Treasury-indexed ARM averaged 5.15 percent, with an average 0.6 point, down slightly from last week when it averaged 5.16 percent.
“Earlier in the week, interest rates were a bit higher, as financial markets were a little anxious about what language the Federal Reserve (Fed) would use in its statement this month,” said Frank Nothaft, Freddie Mac vice president and chief economist.
“When the Fed signaled that it’s interest-rate tightening may be coming to an end soon, the financial market breathed a sigh of relief, and rates eased somewhat.”
In Bankrate.com’s survey, mortgage rates retreated on hopes that consistent interest-rate increases are winding down. The average 30-year fixed rate mortgage dropped from 6.39 percent to 6.34 percent, according to Bankrate.com’s weekly national survey of large lenders. The 30-year fixed rate mortgages in this week’s survey had an average of 0.39 discount and origination points.
Bankrate.com reported that the average 15-year fixed mortgage rate decreased in a similar fashion, slumping from 5.95 percent to 5.92 percent. The average jumbo 30-year fixed-rate fell from 6.57 percent to 6.51 percent. Adjustable-rate mortgages dipped slightly, with the average 5/1 adjustable-rate mortgage sliding from 5.89 percent to 5.88 percent, and the average one-year ARM slipping from 5.56 percent to 5.53 percent.
The Federal Open Market Committee’s post-meeting statement issued Dec. 13 hinted that interest rates are now at a neutral level that neither helps nor hinders the economy, but stated that further increases may be needed to keep inflation under wraps, Bankrate.com reported. The acknowledgement that an end to interest-rate hikes may be near was enough to push yields on 10-year Treasury securities and fixed mortgage rates lower. Mortgage rates are closely related to yields on long-term government bonds.
Fixed mortgage rates have increased compared to one year ago, but remain attractive in a historical context. Twelve months ago the average 30-year fixed mortgage rate was 5.69 percent, meaning that the monthly payment on a loan of $165,000 was $956.62. With the average 30-year fixed rate now 6.34 percent, the same loan would now carry a payment of $1,025.61. The decreased buying power brought about by higher mortgage rates could weigh on the housing market as borrowers grapple with higher interest rates on other obligations such as home equity lines, credit cards, and student loans.
The following is a sampling of Bankrate.com’s average 30-year-mortgage interest rates this week in some U.S. metropolitan areas:
New York – 6.25 percent with 0.26 point
Los Angeles – 6.37 percent with 0.63 point
Chicago – 6.44 percent with 0.09 point
San Francisco – 6.41 percent with 0.37 point
Philadelphia – 6.22 percent with 0.36 point
Detroit – 6.39 percent with 0.02 point
Boston – 6.36 percent with 0.13 point
Houston – 6.34 percent with 0.76 point
Dallas – 6.38 percent with 0.6 point
Washington, D.C. – 6.21 percent with 0.67 point
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