Mortgage Rates Drift Lower as Economic Concerns Linger
Economic concerns continued to help mortgage rates in the past week, according to data released Thursday by Freddie Mac (FRE). The GSE said that its weekly mortgage market survey found 30-year fixed-rate mortgages averaged 6.40 percent with an average 0.6 point for the week ending Aug. 21, down 7 basis points from last week. Last year at this time, the 30-year FRM averaged 6.67 percent. Five-year Treasury-indexed hybrid ARMS rose slightly, up four basis point to an average of 6.03 percent, with an average 0.6 point. A year ago, the 5-year ARM averaged 6.35 percent. One-year ARMs saw a similar 4 basis-point rise, as well. "Interest rates for fixed-rate mortgages continue to drift down as reports of economic weakness persist. July’s leading economic indicators fell by more than the market consensus and manufacturing slowed in both the Philadelphia and Richmond regions," said Freddie chief economist Frank Nothaft. He also pointed to recent data on the housing front that he characterized as "encouraging," include a recent S&P/Case-Shiller house price report showing moderation in the rate of price declines in key markets. See HW's report on the Case-Shiller HPI here. Mortgage rates may move a bit more in the weeks ahead, if expectations for a hike in the federal funds target rate is any indication. Minutes from the Fed's Aug. 5th meeting, released Wednesday, suggest that the monetary policymaking group's next move will be to tighten credit by raising its core rate. "Although members generally anticipated that the next policy move would likely be a tightening," according to the minutes, it's unclear when the Fed will want to pull the trigger on such a move; some economists (and some within the Fed, as well) have argued that the time to raise rates is now, while others believe persistent economic weakness will stave off rate increases until early next year. For more information, visit http://www.freddiemac.com. Disclosure: The author was long FRE when this story was published; indirect holdings may exist via mutual fund investments, as well. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.