Mortgage rates decline a bit, Freddie Mac says: 30-year at 4.37%
Fixed mortgage rates have settled down along with fears of an abrupt end to the Federal Reserve’s economic stimulus efforts, with the average 30-year home loan rate falling from 4.51% last week to 4.37% early this week, according to Freddie Mac.
Freddie Mac’s latest survey of what lenders are offering to solid borrowers, released Thursday morning, showed the average rate for a 15-year fixed home loan also fell, from 3.53% last week to 3.41%. Borrowers would have paid 0.7% of the loan balance to lenders up front to obtain the rates.
The 4.51% rate recorded last week was the highest since July 2011, a surge that is reducing demand for refinance mortgages. On the other hand, the higher rates have increased demand for purchase mortgages as buyers seek to get in on red-hot housing markets before the cost of funds rises still higher.
In a separate survey Thursday, mortgage software provider Ellie Mae said purchase loans jumped 7% in June to constitute 49% of all newly closed mortgages -- the highest percentage since it began tracking the data in August 2011.
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Fixed mortgage rates generally take their cues from the yield on 10-year U.S. Treasury notes. The yield, or effective interest rate, on these government bonds fell to nearly 1.6% in early May before spiking to 2.7% on July 5. It had fallen back to about 2.5% early Thursday.
Comments by Fed Chairman Ben S. Bernanke and indications that the economic recovery is slower than had been thought soothed fears that the central bank would quickly end its hefty purchases of Treasury and mortgage bonds, which depress rates to stimulate the economy, Freddie Mac chief economist Frank Nothaft noted.
During questioning following a July 10 speech, Bernanke indicated that a “highly accommodative monetary policy,” or additional stimulus, is what’s needed in the U.S. economy, Nothaft said in announcing Thursday’s rate survey.
“Consumer sentiment fell to a three-month low in July,” he noted, “while retail sales in June grew by only ... half of the market consensus forecast. In addition, housing starts fell in June to the slowest pace since August 2012.”
US 30 Year Mortgage Rate data by YCharts
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