Fixed mortgage rates fall to a nine-week low
QE3 continuation caused the drop
Fixed mortgage rates fell to a nine-week low this past week, following the Federal Reserve's announcement that it will maintain its bond-buying program to keep homebuyer affordability elevated.
The 30-year, fixed-rate mortgage posted its lowest level since the week ending July 25. The 30-year, FRM came in at 4.32%, down from 4.50% last week, but up from 3.40% last year, Freddie Mac said in its Primary Mortgage Market Survey.
The 15-year, FRM decreased to 3.37%, down from 3.54% last week and a steep rebound from 2.73% last year.
Meanwhile, the 5-year Treasury-index adjustable-rate mortgage averaged 3.07%, down from 3.11% last week and an increase from 2.71% a year ago.
Additionally, the 1-year Treasury-index ARM declined to 2.63%, down from 2.65%, but up from 2.60% a year earlier.
"Mortgage rates fell following the Federal Reserve announcement that it will maintain its bond-buying stimulus," said Frank Nothaft, vice president and chief economist for Freddie Mac.
He added, "These low rates should somewhat offset the house price gains seen the last number of months and keep housing affordability elevated. For instance, the S&P/Case-Shiller 20-city composite house price index rose 12.4% over the 12-months ending in July, which represented the largest annual increase since February 2006. In addition, more than half of the cities had annual growth exceeding 10% and four cities saw increases exceeding 20%."
Bankrate data also show mortgage rates falling to a three-month low.
Bankrate’s 30-year, FRM dropped to 4.47% from 4.66% a week earlier.
In addition, the 15-year, FRM decreased to 3.53%, down from 3.7%, while the 5/1 ARM dropped to 3.41% from 3.55%.
Bankrate senior financial analyst Greg McBride also attributed the continued decline in mortgage rates to the Fed’s decision to not begin tapering its monetary stimulus.
"Mortgage rates will likely resume their upward march when the Fed does inevitably begin their tapering," McBride said.
He continued, "With the looming debt ceiling and the government debate, the Fed wanted to make sure Congress didn’t run the economy off the rails in October."
However, according to the Federal Housing Finance Agency, mortgage rates continued their upward trend in August, with the contract mortgage interest rate increasing slightly by 0.25% to 4.35%.
Additionally, the average interest rate on a conventional, 30-year, FRM of $417,000 or less hit 4.49% in August, the FHFA reported.
The average loan amount in the latest FHFA report was $274,500 in August, down from $278,000 in July.