Fixed Mortgage Rates Steady; ARMs Fall
Freddie Mac released its weekly update on national mortgage rates Thursday morning, revealing a disconnect between rate trends among fixed-rate mortgages (FRM) and their adjustable-rate mortgage (ARM) cousins.
Both of the most popular FRM types -- 30-year fixed and 15-year fixed -- saw no movement in rates over the past week. Thirty-year FRMs held steady at 4.57% while 15-year FRMs remained stuck at 3.59%. Rates remain near two-year highs, but still low by historical standards.
ARMs in contrast, moved down quite a bit. 5/1 ARMs dropped six basis points to average 3.22%; one-year ARMs slipped four b.p. to 2.67%.
Freddie Mac Vice President and Chief Economist Frank Nothaft cited mixed employment reports. He said in a statement that August's jobs report showed the national unemployment rate falling to 7.3%, while the number of new jobs added (169,000) was below forecast, and the estimates of jobs added in June and July were reduced by 74,000.
Weakness in hiring leads to weakness in paychecks, and tends to put a ceiling on homebuyers' ability to pay higher mortgage rates.
Rates could change quickly next week when the Federal Reserve addresses its bond purchase program. Long-term mortgage rates have risen more than a full percentage point since May, when Chairman Ben Bernanke first signaled that the Fed could reduce its bond purchases this year. Most analysts expect the Fed to decide at its meeting next week to scale back its bond purchases.
-- Material from The Associated Press was used in this report.
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