Weak Housing Market Leads to Week of Lower Mortgage Rates
Freddie Mac released its weekly update on national mortgage rates on Thursday morning, showing continued declines in mortgage rates despite the Fed's intention to continue tapering bond purchases.
Thirty-year fixed-rate mortgages (FRMs) declined nine basis points over the past week, falling to 4.23%. Fifteen-year FRMs likewise declined, down seven b.p. to 3.33%.
Adjustable-rate mortgages (ARMs) performed similarly, with 5/1 ARMs and 1-year ARMs each shedding four basis points, falling to 3.08% and 2.51%, respectively.
Commenting on the results, Freddie Mac vice president and chief economist Frank Nothaft cited significant weakening in the housing market as reasons for the falling rates. Noted Nothaft: "The pending home sales index fell 8.7 percent in December to its lowest level since October 2011. Fixed residential investment negatively contributed to GDP in the fourth quarter for the first time since the third quarter of 2010."
Weak economic data elsewhere in the economy is also apparently doing its part to keep rates low. Earlier this week, the Institute for Supply Management reported significant slowing in growth in the manufacturing industry in December.
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